Jack Wall (Kildare South, Labour)
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Question 200: To ask the Minister for Finance his views on correspondence (details supplied); the action he will take to address the matter of the lack of available funds to small and medium enterprises; if his attention has been drawn to the black market effect of cash in hand that the lack of such funding will create; and if he will make a statement on the matter. [15579/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Government Departments and State agencies have engaged with banks and business representatives in a variety of settings on issues surrounding the flow of credit for business. A formal structure for those contacts on an ongoing basis will be finalised shortly.

A Code of Conduct for Business Lending to Small and Medium Enterprises was published by the Financial Regulator on 13 February and took effect on 13 March. This code will apply to all regulated banks and building societies and will facilitate access to credit, promote fairness and transparency and ensure that banks will assist borrowers in meeting their obligations, or otherwise deal with an arrears situation in an orderly and appropriate manner. The business lending code includes a requirement for banks to offer their business customers annual review meetings, to inform customers of the basis for decisions made and to have written procedures for the proper handling of complaints. Where a customer gets into difficulty the banks will give the customer reasonable time and seek to agree an approach to resolve problems and to provide appropriate advice. This is a statutory code and banks will be required to demonstrate compliance.

In addition, as part of the recapitalisation package announced on 11 February, Allied Irish Bank and Bank of Ireland 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, then the extra 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. Compliance with this commitment will be monitored by the Financial Regulator. The banks will make quarterly reports, with the first report to end March 2009 to be submitted by end April 2009. Officials from my Department are also in regular contact with the banks concerned in relation to their progress on implementing these measures.

An independent review of credit availability, funded by the banks but managed jointly by the banks, Government and business representatives is also underway and will be completed shortly. Amongst the issues covered by this review will be changes in bank lending, repayment terms and a comparison with customer experiences prior to the onset of the financial crisis. I am satisfied that this review, along with the quarterly reports from the recapitalised institutions, will give a clear picture regarding the flow of credit in the Irish economy which will inform future policy.