Community finance programme announced

A strategy to help people avoid using pay-day lenders and loan sharks has been announced by the BNZ in conjunction with the Government, Good Shepherd NZ and the Salvation Army.

The bank has committed $10 million to a community finance initiative offering interest-free and low-interest loans to people banks do not normally lend to.

The programme will start with a one-year pilot scheme.

BNZ director of strategy and business performance, Michelle van Gaalen, said the sheme was aimed to help people become self-sufficient and would build on the bank's range of financial literacy initiatives.

''BNZ wants to help all New Zealanders be good with money, including those who currently don't have access to conventional sources of credit.

''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.''

The BNZ would draw on the experience of its parent, the National Australia Bank, which had been running a successful community finance programme for more than 10 years, she said.

For some, community finance was seen as a way to help people break out of poverty.

For others, it was a way to promote economic development, employment and growth.

For the BNZ, it was the right thing to do, Ms van Gaalen said.

Social Development Minister Paula Bennett said the announcement honoured commitments made in last year's Budget to boost practical support for people on low incomes.

''We're already helping beneficiaries and people on low incomes to buy whiteware and more children are being fed in schools.

"Now, we're focused on increasing the wellbeing of families by assisting them to avoid unscrupulous lenders and their crippling interest rates,'' she said.

Budget 2014 is on May 15.

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