Reserve Bank Governor Alan Bollard's call for banks to ease up on business lending terms may fall on deaf ears, warns a banking expert.
Dr Bollard is expected to meet bank bosses in the next few weeks to reinforce to them the need to lend to sound businesses on reasonable terms.
The central bank governor says he is receiving an increasing number of complaints from businesses about the terms imposed on them by banks. He says he has heard that banks are placing strict terms and conditions and covenants on money lent to businesses.
But Massey University's head of banking studies, David Tripe, says there is a limit to how much lenders will listen to Dr Bollard's call.
Dr Tripe says the Reserve Bank Act gives the governor broad authority to direct banks, but this legislation can be used only if the banks' actions threaten the stability of the financial system.
The bank lowered the Official Cash Rate to 3% on Thursday, but some business groups say companies are finding it hard to get loans from banks and do not believe the cut will make a difference.