Madam, – The great lie that has been peddled by this Government – that Nama is the best route to get banks lending to small firms – has dramatically been further exposed by this week’s savage action by AIB, which has reduced the rate of interest payable on business demand deposit accounts to 0.20 per cent. That is a staggering reduction of 87.66 per cent from the previous barely tolerable 1.62 per cent.
So the deal now is that small firms are supposed to “lend” the banks their deposit monies for a paltry 0.20 per cent, or alternatively if they wish to earn 2.29 per cent from AIB they can tie up their deposit money for 30 days.
Should the businessperson have an urgent need of cash due to expected debtor payments not arriving on time, the only mechanism is to overdraw (a rare occurrence now as most small firms have had their overdrafts reduced or pulled by the banks) and pay the bank a minimum interest rate of 7.95 per cent.
So there it is, quite simple. The banks will use the deposit monies of small firms and pay them practically nothing, continue to refuse to make credit available to those same small firms and screw their customers to the wall if they get caught short of cash.
How can we all be so stupid to tolerate the downright lie that is perpetrated on us that Nama will make it all better? Am I missing something here?