Pat Rabbitte (Dublin South West, Labour)
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Question 89: To ask the Minister for Finance the efforts that have been undertaken to introduce a mechanism whereby credit unions with surplus, uninvested funds can channel these funds into secure, productive investments in the Irish small and medium enterprise and infrastructure lending sectors; and if he will make a statement on the matter. [41651/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Government has brought in a series of measures to ensure that viable businesses, especially SMEs, get the credit they need. As part of the Government's strategy, announced last March, both AIB and Bank of Ireland have committed to lending €12 billion for new or increased credit facilities to SMEs over two years (from March 2010). This lending is being monitored on a monthly basis by sector and geography and reviewed by Mr. John Trethowan of the Credit Review Office.

In addition, the banks are working with Enterprise Ireland and the IBF to develop sectoral expertise in the modern growth sectors of the Irish economy and to develop the range of banking services that Irish SMEs trading internationally will need.

Furthermore, AIB and Bank of Ireland are also subject to the Credit Review Office. SME businesses that have had credit refused or withdrawn, can apply for an independent review of the bank's decision after the internal appeal.

The Deputy is aware credit unions are independent financial institutions with full responsibility and control over their own funds. It is open to credit unions to invest surplus funds as they see fit provided that such loans or investments are made in accordance with the provisions of the Credit Union Act 1997. As Minister for Finance I do not have a role in making recommendations to credit unions on where they might invest their funds.

Section 55 of the Credit Union Act 1997 sets out details of the functions of the board of directors of a credit union. This includes the making of decisions on applications for loans and decisions in respect of the investment of funds of the credit union. There are also obligations on boards on the general control, direction and management of the affairs, funds and records of their credit unions. In this context, the Registrar of Credit Unions requires credit unions to manage their business in a prudent manner and to comply with all regulatory requirements, guidance notes and circulars which he issues.

It goes without saying that a credit union must have the relevant skills and expertise to evaluate and manage commercial lending and the resulting exposure to the credit union. Skills, experience and expertise are a prerequisite before a credit union should consider any proposals to engage in SME lending. Where credit unions are approached about such lending, the Registrar would expect that in the first instance they would discuss this with his Office particularly as it is a specialist type of lending required by many SMEs.