Littleproud welcomes NAB’s leadership on Farm Management Deposits
24 July 2018
- Australia's biggest agri-lender to allow farmers to use FMDs to offset their loans
- Result comes after Minister Littleproud called for and fought for the measure
- Minister thanks NAB for leading; looking after farmers in drought, having a social conscience
Minister for Agriculture David Littleproud has welcomed news the nation's largest agri-lender, NAB, will allow farmers to offset their Farm Management Deposits against their loans.
NAB has also announced it will no longer charge penalty interest payments on farmers who fall into default on their loans.
Farm Management Deposits allow farmers to remove money from their taxable income during good years, to later use during tough times. Minister Littleproud had called for banks to allow farmers to use these deposits as offsets against their loans the same as many people use an everyday offset account which offsets interest on their home loan.
Only one bank in Australia, Rural Bank, had offered farmers the chance to use their FMD as an offset against their loan despite the Coalition Government changing the law to allow it in 2016, and also doubling the amount a farmer could hold in their FMD to $800,000. Minister Littleproud had called for the big banks to get on board and show some leadership for farmers facing drought and had repeated his call at his recent Drought Roundtable in Canberra.
"This is fantastic news for Aussie farmers. One in three farmers bank with NAB so this change has the potential to help a lot of families.
"This is an investment in agriculture's future and farmers can now vote with their wallets. I hope other Aussie banks follow NAB's lead and get on board.
"Last week foreign-owned Rabo bank turned up its nose at Aussie farmers, ruling out an FMD offset product. You have to ask how serious that bank is about agriculture in Australia. It's fantastic an Aussie owned bank has shown a social conscience and led from the front.
"If you're a farmer whose bank doesn't offer an FMD offset, you can tell them to bugger off because there are banks now which do.
"I also congratulate NAB on removing penalty interest when a farmer defaults on a payment during drought. I call for other banks to do the same. But it's also an opportunity for the banking sector to reassess penalty interest as a whole because I don't think the charge truly reflects the cost to the bank. It's really a kick in the guts when someone's down, which isn't the Australian way. Banks have an opportunity to improve their standing in the community and win back some social licence by reassessing these charges.
"I congratulate NAB boss Andrew Thorburn for acknowledging the banks have had issues in rural Australia and stepping up to lead."