Frank Feighan (Roscommon-South Leitrim, Fine Gael)
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I wish to share my time with Deputy John O'Mahony.

Brendan Howlin (Wexford, Labour)
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Is that agreed? Agreed.

Frank Feighan (Roscommon-South Leitrim, Fine Gael)
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We are at a crisis in this situation. The banks have got a guarantee of being bailed out by the Irish taxpayer, but they are not doing enough to bail out businesses, farmers and home owners. I have heard farmers complaining that they do not have enough money to feed cattle, but the banks do not even answer their phone calls. Sometimes cheques to the value of €50 are being returned, while the banks are charging up to €15 for dealing with a bounced cheque. That is happening to tens of thousands of people around the country, but the banks are not showing enough flexibility to secure jobs. I have given the banks a hard time over the years, as well as in more recent times. The banks have been bailed out by the taxpayer, so the Government should ensure that they give support to small and medium enterprises, the farming community and home owners. These are very difficult times, but we will get out of this recession by keeping jobs. It begins and ends with jobs, but not enough is being done because we are in denial.

The elephant in the room concerns the six banks which have been guaranteed by the taxpayer. Three of those banks, including Anglo Irish Bank, are getting in huge deposits because they are giving priority rates, but they are not lending one cent to any business or farmer around the country. I would like to highlight other banks not covered by the Government guarantee scheme, which are also offering rates. I do not mind what is happening but people who deposit money in these banks may not get it back because they are taking money out of the economy. As a country, we have protected banks. Individuals and companies, including major insurance companies, should put their deposits in the three main banks because that is the only way to get money back into the system, although I acknowledge they will also be recapitalised.

John O'Mahony (Mayo, Fine Gael)
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I thank Deputy Feighan for sharing time and I commend him on the work he has done and the commitment he made to highlight the necessity of funding for small businesses. Small businesses in my area are under pressure from both sides. They cannot access money from the banks while, at the same time, they are being put under pressure by their suppliers because of the difficult times they are experiencing. Deputy Feighan has continually raised the cheque clearance issue. It is taking longer for cheques to clear nowadays and I know of business people whose cheques have bounced even though they had lodged money in their accounts. That is not good enough.

I met a shopkeeper recently who two years ago applied to the bank for money to upgrade his business and, thus, generate employment. He asked for €50,000 and he was offered €300,000. He was cautious at the time as he wanted to establish whether his figures would hold up and he did not take money. Last week he went back to the bank seeking €50,000 because the figures he presented two years ago had held up but his application was refused. That is also not good enough. Whatever has to be done to free up money for such individuals must be done. We regularly hear reports of companies closing with job losses of between 200 and 500 and so on but we never hear about the loss of one or two jobs in businesses. The individual to whom I refer would have created two new jobs if he had secured his loan of €50,000 because he hoped to provide a new service in his shop.

I was also approached by a farmer who applied to the bank for funds to restock his farm. He had been granted larger loans in the past and he could not keep the money back from the bank but it would not give him the money to restock the farm. I commend Deputy Feighan.

John Moloney (Laois-Offaly, Fianna Fail)
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I thank Deputies Feighan and O'Mahony for raising the issue.

The covered institutions financial support scheme, which guarantees the liabilities of the covered institutions, was put in place in September 2008 to maintain the stability of the financial system in Ireland. Without it the covered institutions would not have been in a position to lend to the real economy. However, the scheme did not impose any lending requirements on covered institutions. Both Allied Irish Banks and Bank of Ireland have made explicit commitments on lending in the context of the recapitalisation package announced on 11 February this year. The banks reconfirmed their December commitment to increase lending capacity to small and medium enterprises, SMEs, by 10% and to provide an additional 30% capacity for lending to first-time buyers in 2009. If the mortgage lending is not taken up, the additional capacity will be available to SMEs. AIB and Bank of Ireland have also committed to public campaigns to actively promote small business lending at competitive rates with increased transparency on the criteria to be met.

Building on the banks' commitment to the indigenous venture capital sector, both banks have further committed in excess of €15 million each to new or existing seed capital funds in collaboration with Enterprise Ireland's seed and venture capital programme to further create and develop indigenous enterprise. The banks' funding will be matched as appropriate by funding under Enterprise Ireland's programme and-or by funding from other national or international investors. The supplementary documentation on the National Asset Management Agency issued in September gives details of SME lending by AIB and Bank of Ireland.

Prompt payment is important to underpin cashflow, particularly for small businesses. The recapitalised banks have committed to prompt payment arrangements in future customer contracts, which will involve payment within 30 days and a late payment interest charge on any payments made after 30 days. The Financial Regulator has been monitoring compliance with the above commitments and no issues have arisen requiring attention. The Government has introduced arrangements to reduce the payment period by Departments to business from 30 to 15 days.

In addition, my colleague, the Tánaiste and Minister for Enterprise, Trade and Employment has set up a clearing group, including representatives from the main banks, business interests and state agencies, which is chaired by her Department. The purpose of the group is to identify specific patterns of events or cases where the flow of credit to viable businesses appears to be blocked and to seek to identify credit supply solutions. Businesses have been invited to send details of such credit refusals to a dedicated e-mail contact point at the Department. Although the group cannot act as an appeal mechanism for individual cases of credit refusal, it is charged with seeking to identify credit supply solutions relating to any patterns identified. Information provided by businesses will inform and assist this work.

There was some controversy about the perception of credit availability in the economy. The Government, therefore, investigated the issue through a comprehensive independent review of SME lending from both the demand and supply perspective. This was undertaken in the context of the recapitalisation and was published in July. The review showed that demand had fallen sharply, with the value of new applications for credit down by 42%. Stock of credit remained static, indicating that new credits matched repayments. I understand that in a normal year between 15% and 20% of outstanding credit might be repaid and, therefore, significant lending must take place, even to keep the figure constant. The review, conducted by Mazars, found that refusal rates vary markedly by sector from 6% to 48%, according to the SMEs surveyed. This finding clearly contradicts the allegation of a blanket refusal to lend. Mazars also examined a sample of files where credit was refused and found that, in general, "refusal seemed reasonable in the context of normal commercial and business criteria".

A follow-up review covering the period to September is under way. The institutions covered by the guarantee are monitored by the Financial Regulator on a regular basis and monthly figures for SME lending indicate that substantial flows of credit are taking place, even though activity is down on previous years.