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According to recent report banks are now facing pressure to increase lending rates. Read the detailed report:
As Business Secretary Vince Cable’s warned banks for not acting in national interest, banks will now face renewed pressure from the government to increase loans to hard-pressed companies.
Expressing his frustration during the unveiling of joint consultation paper with the Treasury outline options for the better cash flow to businesses.
Some of the suggested measures to increase influx of much needed funds are regional stock exchanges, more government loan guarantees and ways to boost banking system liquidity.
Banks have also been warned that they may need to sign-up to type of loan guarantees, already agreed upon by part-nationalized banks like Lloyds and RBS if they don’t act.
The Banking sector, however, asserts lending is on the rise and most firms applying for loans are obtaining them – blaming a lack of demand from companies concerned about risk not a supply failure.
Mr Cable said: “We are very worried about the behaviour of the banks. They are not acting in the national interest. It is a very serious problem and potentially a growing problem “I don’t think the banks get it.
“At the moment we are talking to them in an amicable way and we are monitoring them, but if this doesn’t work there are combinations of carrots and sticks that can be employed.”
The British Bankers’ Association said: “Banks are willing and able to lend to businesses where they can see how the money will be paid back and where firms have a viable business plan.”
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