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Tuesday 20 February 2018

Banks 'manipulated' low-cost loan scheme for their own interest, says TD

Ciaran Moran

Ciaran Moran

The banks' handling of a Department of Agriculture-backed Agricultural Cashflow Support Loan Scheme has been heavily criticised by a number of TDs at a meeting of the Oireachtas Agriculture Committee this week.

Fianna Fail's Jackie Cahill was among the strongest critics of the banks' operation of the Scheme and said at the hearing that banks had 'forced' farmers to take shorter loan terms than they wanted.

"The Scheme was designed to be a six-year scheme, with an option for the first three years to be interest only, if the client so desired.

"The Scheme was to ease a farmers' cashflow to help him get back on the rails where he was trying to clear debt."

However, Cahill said banks had forced clients to take significantly less of a term.

"They got away with it. They have done it.

"I can’t see why they should have been allowed to do it.

"Why should the banks have the prerogative to force them to take a shorter term," Cahill said.

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"For me, the banks have not operated the Scheme in the spirit the Department meant. I think the banks have manipulated the Scheme for their own benefit.

"By shortening the term of the loan, it’s defiantly not in the clients' interest. The longer he (the farmer) had the cheaper loan the easier it was to get his cashflow right."

Responding, the Minster for Agriculture, Michael Creed said the Scheme was a maximum of six years and said “it didn’t say every loan applicant was entitled to six years".

He said the consideration of any loan application was subject to normal terms and conditions applied in terms of the bank’s criteria and assessment of a loan application.

Minister Creed said he was not defending the banks and said analysis would be carried out into the operation of the Scheme in due course.

The Minister also told the hearing that applicants have access to the Credit Review Office, if their application was refused.

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