Timmy Dooley (Clare, Fianna Fail)
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To ask the Minister for Finance in view of the failure to encourage the pillar banks to lend in adequate amount to meet demand in the economy if he is considering alternative strategies for improving access to credit; and if he will make a statement on the matter. [42298/12]

Michael Noonan (Limerick City, Fine Gael)
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I do not agree with the Deputy’s assertion that there has been a failure to encourage the pillar banks to lend in adequate amount to meet demand in the economy. The Government has imposed SME lending targets on the two domestic pillar banks for the three calendar years, 2011 to 2013. Both banks were required to sanction lending of at least €3 billion in 2011, €3.5 billion this year and €4 billion in 2013 for new or increased credit facilities to SMEs. Both banks achieved their 2011 targets and I would be confident of them achieving the more challenging target this year. In terms of rejection rates from banks, I would remind the Deputy that the Credit Review Office (CRO) can review decisions by the pillar banks to refuse, reduce or withdraw credit facilities, including applications for restructured credit facilities, from €1,000 up to €500,000. The CRO is overturning 55% of the refusal decisions referred to them and I would appeal to SMEs and farmers who have been refused credit by the banks to avail of the services of the CRO.

The Deputy should be aware that the Microenterprise Loan Fund Act provides for a scheme which will facilitate up to €40million in additional lending to microenterprises over the next five years. Furthermore, the Government is in the process of facilitating up to €150m per annum of additional credit through the Temporary Partial Credit Guarantee Scheme, designed for SME’s who, because of lack of collateral or because of the specialised sector they operate in, face difficulties in accessing bank credit.

In summary, it is vital that the banks continue to make credit available to support economic recovery. However, it is not in the interest of the banks, businesses or the economy for finance to be provided unless the business is viable and has the capacity to meet the interest payments and repay the sum borrowed. I remain open to any constructive suggestions which could augment the Government’s initiatives in this area.