Sydney, 13 March, 2006: The Australian Bankers’ Association (ABA) is encouraging farmers worried about the impact of drought and other extreme weather conditions to seek Exceptional Circumstances assistance from the Federal Government and their bank.
Some farmers in the Lake Grace area of Western Australia have been adversely affected by frost, hail and flood with the result that two consecutive years income has been severely diminished, putting pressure on extended finances.
The banking sector recognises the seriousness of these conditions in the Lake Grace area and will continue supporting viable farmers.
Banks have and will continue to work with the Federal Government which provides Exceptional Circumstances assistance to farmers and rural communities in the form of interest rate subsidies, fodder subsidies, fodder transport subsidies, livestock transport subsides, crop planting grants, general grants, unemployment benefits and Austudy assistance.
David Bell, Chief Executive of the ABA, is urging any bank customer, who is worrying about the impact of these extreme weather conditions on their financial position, to contact their bank if they have not already done so.
“Banks manage the impact of extreme conditions on their customers on a case-by-case basis reflecting varying impacts and options available to individual customers. The financial position of individual customers varies and this determines the options that are available.”
During these difficult times, banks, as a short-term measure, typically lend viable farmers carry-on finance to enable shortfalls in cash flow to be met. In some cases, to help reduce cash outgoings, individual banks may put in place the short-term measure of restructuring existing loans, so as to reduce annual debt repayments - this may involve extending the term of a loan or allowing interest-only payments for a period of time.
For customers receiving Federal Government interest rate subsidies, it is the general practice of banks not to increase credit risk margins on loans, where customers comply with usual bank requirements.