Michelle Mulherin (Fine Gael) | Oireachtas source

I thank Mr. Ashmore for his presentation. I very much welcome the scheme and farmers are benefiting from it. The way the opportunity was grabbed by so many so quickly, while welcome, is also a reminder of the untenable rates being offers by banks for term loans and overdrafts, which farmers and businesses in general have to contend with as they try to keep their operations going. My questions relates to how the scheme is operated by the banks. What interest rates do financial institutions charge for similar products? Does the fact that the banks are in receipt of a 2% subsidy per quarter mean they are effectively generating an interest rate of 4.95% on this money? Compared to their normal operating practice where they draw down money and they pay something back on the strength of that, I presume they are paying the State nothing for this money and are just facilitating the process. Are the State or some European institution getting a cut of this or are the banks just facilitating it?

With regard to terms and conditions, I gather from what Mr. Ashmore said that nobody is being asked to offer security in respect of these loans. I presume this because they are 80% guaranteed by the State. Will he confirm that this is correct? The entire amount was committed within 20 days of the money being offered but, for non-securitised lending, it seems to be taking a long time for it to be released to borrowers.

I was trying to follow the information the SBCI is getting from the banks. Mr. Ashmore said certain information is not captured regarding how many more people might have availed of this if they could have and, therefore, we should try to assess how many farmers were not in a position to avail of the scheme and are now paying the full whack in commercial interest rates. How much are the banks charging on average for a similar product?

He said it creates further complications with the banks to ask them more questions and to glean more information. They are getting a good deal on this in respect of what is being guaranteed and they are still applying the criteria for sound lending while 80% of the funds are guaranteed. They are, therefore, only taking on 20% of the risk. They should be fully co-operative with the SBCI, as an agency of the State, regarding information it might seek about this novel product.

The SBCI was established to provide funding to SMEs and to address the problems persisting with the banks. It would not be in existence if there were not problems with the banks. The SBCI provides low cost funding to financial institutions, which they pass on to SMEs, according to its website. Banks are accessing cheap money currently on the markets and our problem is they are not passing it on yet when the SBCI can access money, they will pass it on subject to terms and conditions. Other than to get us through a difficult period, how can the agency's activities bring pressure to bear on the banks to reduce their interest rates or will they just simply benefit from a scheme the State has set up in response to a difficulty that farmers and small businesses face to which they are not responding?

It is also stipulated that the SBCI provides "market access for new entrants to the SME lending market creating real competition". How does it assess its ability to create competition given there does not seem to be any competition? The banks are doling out this money on behalf of the SBCI but they are still not reducing interest rates. To what extent are new borrowers being facilitated under this scheme as opposed to existing borrowers? How does that tie in with the agency's founding objectives to help farmers and SMEs? Mr. Ashmore might have gathered that I am sceptical about the banks in general based on their track record and the way they operate currently, particularly in view of the fact that they have access to cheap money but will not pass it on.