Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

The on-lenders will need to demonstrate that it is new lending in the first instance. The purpose of the Bill is to provide additional credit to SMEs. The word "additional" is important. It is not substitute credit to enable the banks to make more profit. It is not a scheme to assist the banks but a scheme to assist the SMEs.

Second, if a tranche of money is provided to an on-lender, the latter will have to account for how the money has been on-lent. Any moneys that have not been on-lent to an appropriate SME will have to be returned to the main lender. KfW does not have any particular problem with this because it operates the same model in Germany. The European Investment Bank also operates this model. It provides sizeable amounts of money to both AIB and Bank of Ireland, and there is a reporting system that ensures the money goes to SMEs and is not diverted to other borrowers at the banks' discretion. There are reporting systems in place that are satisfactory. We will continue to take advice from KfW. It has been very helpful in the negotiations thus far. It is committed to assisting us in the set-up stages of the new institution.

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