Extending financial services to disadvantaged Australians
Australians currently excluded from mainstream banks and services will have access to fair and appropriate financial products, including loans, under a $7.5 million Australian Government pilot program.
The funding will be used to develop the community development financial institution sector in Australia, which currently includes around 10 institutions and up until now has had little Government support.
The Minister for Families, Community Services and Indigenous Affairs, Jenny Macklin, told the inaugural Social Inclusion Conference in Melbourne today that new approaches were needed to support people in building their own financial security.
This includes looking at innovative ways to provide vulnerable people, who have the capacity to repay a loan but who are excluded from mainstream financial services, with access to safe and affordable credit.
We want to make sure that people have access to fair credit that is appropriate for their means and reflects their ability to repay.
Services like these can be an important stepping stone to mainstream financial services and financial independence.
Community development financial institutions provide individuals and organisations that have been knocked back from mainstream banks and services, with access to appropriate and fair financial products, such as loans with moderate interest rates.
They typically cover their costs through Government assistance, as well as philanthropic and private investment – bringing together government, business and community.
We are keen to work with existing Australian community development financial institutions, mainstream banks and the philanthropic sector to develop the potential of the sector in Australia.
In the United States, for example there are more than 1000 similar organisations with a loan portfolio of around $20 billion.
In 2006, community development financial institutions in the US financed 8185 businesses and microenterprises and created and maintained over 35,000 jobs.