Bernard Durkan (Kildare North, Fine Gael)
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Question 284: To ask the Minister for Finance if he has sought or received an indication from the banks regarding lending to small and medium sized enterprises in return for the rescue package provided for such institutions by the State; and if he will make a statement on the matter. [38141/09]

Bernard Durkan (Kildare North, Fine Gael)
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Question 289: To ask the Minister for Finance when he expects conventional lending best practice to be restored having particular regard to the guarantees given by the State to the banking sector; and if he will make a statement on the matter. [38146/09]

Bernard Durkan (Kildare North, Fine Gael)
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Question 290: To ask the Minister for Finance when he expects lending to be restored with particular reference to meeting the needs of persons seeking to borrow on the basis of good and practical proposals; and if he will make a statement on the matter. [38147/09]

Bernard Durkan (Kildare North, Fine Gael)
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Question 291: To ask the Minister for Finance the steps he will take to ensure that the banking sector responds to the various guarantees given by the State in a positive manner with particular reference to meeting the ongoing needs of the business and commercial sectors in accordance with good practice; and if he will make a statement on the matter. [38148/09]

Bernard Durkan (Kildare North, Fine Gael)
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Question 292: To ask the Minister for Finance the steps he will take to address the matter of the starvation in respect of working capital throughout the business sector; and if he will make a statement on the matter. [38149/09]

Bernard Durkan (Kildare North, Fine Gael)
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Question 293: To ask the Minister for Finance the discussions he has had with the business community with a view to achieving banking support for business in line with good business practice; and if he will make a statement on the matter. [38150/09]

Bernard Durkan (Kildare North, Fine Gael)
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Question 294: To ask the Minister for Finance the discussions he has had with the banking sector with a view to restoration of lending to the business sector with particular reference to small and medium sized businesses; and if he will make a statement on the matter. [38151/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 284 and 289 to 294, inclusive, together.

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. Both AIB and Bank of Ireland have made explicit commitments on lending in the context of the recapitalisation package which was announced on 11 February this year.

Specifically, 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.

Building on the banks' commitment to the indigenous venture capital sector, AIB and Bank of Ireland have further committed in excess of €15m 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 Seed and Venture Capital Programme and/or by funding from other national or international investors. The supplementary documentation on NAMA issued in September, gives details of SME lending by AIB and Bank of Ireland.

Prompt payment is important to underpin cash flow, particularly for small businesses. The recapitalised banks have committed to prompt payment arrangements in future customer contracts which will involve payment within thirty days and a late payment interest charge on any payments made after thirty days.

I would direct the Deputy to Section 4 of the supplementary booklet on NAMA for further detail on the above. 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 Government Departments to business from 30 to 15 days.

Additionally, the Deputy might like to be aware that 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. A comprehensive independent review of SME lending from both the demand and supply perspective was undertaken 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 broadly matched repayments. I understand that in a normal year, 15% to 20% of outstanding credit might be repaid, so that 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 currently underway.

In addition, I announced during the Committee Stage debate on the NAMA Bill last week that I will be introducing a Report Stage amendment to the Bill to provide a power to issue guidelines to the participating institutions on lending practices and procedures to improve the flow of credit to SMEs and, if necessary, other sectors. The power will be a wide ranging one and will allow for a response adapted to the particular circumstances of different institutions and sectors. This approach recognises that this is a complex situation and allows for a flexible response to changing credit needs.