A €12bn plan for bank lending to credit-starved small and medium enterprises (SMEs) will be announced by the minister for finance Brian Lenihan this week. Three billion euro will be provided by AIB and Bank Of Ireland to lend to various small and enterprises each year for two years.
A Department of Finance spokesman said: "Overall €3bn per year will be lent out by each bank and a system will be set up to track how it is lent out into various sectors."
The banks are expected to play their part in assisting with the economic recovery by providing funding to viable businesses.
The €3bn to be provided by Bank of Ireland and AIB is for new or increased credit facilities to SMEs this year and next year. The money will also include funds for working capital for businesses and it will not be confined to new loans.
John Trethowan has been examining bank lending policies as part of his remit as credit reviewer and he will release his first quarterly report into the banks' lending this week.
The report and details of the €12bn lending plan will be presented to Cabinet this week where it is expected to be approved and released afterwards by Lenihan.
To counter a recurrence of past mistakes where the banks lent out too much money in areas such as property-related lending, Trethowan will implement a new system "for keeping track of how the fund is lent, by sector and by geography", according to the Department of Finance.
When details of the banks' new SME lending initiative were first mooted last March, Lenihan also said that he was going to implement a series of requirements on the banks to fund Enterprise Ireland-supported ventures.
He is now requiring banks to commit resources to this area by "developing expertise and bringing forward new credit products in areas where cash flow, rather than property of asset, is the basis for business lending."
He recently told a Dáil debate on the issue that during the boom years Irish bankers "played fast and loose with the economic interests of this country".
He believes that as "senior figurers in Irish banking made appalling decisions that will cost the taxpayer dearly in years to come" then they must facilitate economic recovery.