by Susan Edmunds
The bank announced yesterday that it had committed $10 million over the next five years to a community finance initiative offering interest free and low interest loans to low-income borrowers.
Michelle van Gaalen said it was designed for people who might otherwise have to turn to loan sharks when they needed to repair whiteware or replace the family car.
The programme will start with a one-year pilot and will be delivered in partnership with the Government, Good Shepherd NZ and The Salvation Army.
“Traditionally, banks haven’t provided loans to customers with minimal income, so those people have been using the only other option they feel they have – borrowing at extortionate rates,” van Gaalen said.
She said BNZ would be able to draw on the experience of NAB in Australia, where it has been operating a similar scheme.
The development of the pilot is in early stages but is intended to launch over the coming months initially in areas where the need is most acute. Van Gaalen said details such as loan size limits would be determined in the next month or so but she said it would not include mortgages.
BNZ will provide capital, the Government will contribute to NGO operating costs, and Good Shepherd NZ will oversee the initiative. The Salvation Army will be responsible for managing the loan applications.
BNZ has appointed Frances Ronowicz to the role of head of community finance to lead the new initiative.
Van Gaalen said BNZ had been working on the idea for about a year. She said the bank would ensure that its lending did not overlap with Work and Income loans.
She said: “There is some risk but it’s a risk we’re willing to take because it’s the right thing to do.”
Bank staff had responded extremely positively to the move, she said.
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