London (Shakespeare Finance) November 1, 2009:

The British government seems getting tougher with the banks regarding their lending freeze policies. Since the government has invested about £37 billion in its bailout packages, now it wants the banks to fulfil the commitments made during the bail-out talks.

As a share-holder in the three major banks, namely the Royal Bank of Scotland, HBOS and Lloyds TSB, the government wants these financial institutions to be obedient to their commitments made during the bail-out negotiations. It is to be noted that these banks had promised to provide sufficient lending through loans and mortgages to the small business and enterprises. The government maintains that the common taxpayers' money was involved in the recapitalisation process, now it is the banks' duty to give top priority about giving loans to individuals and businesses.

"Having recapitalised the banks, we must ensure that the money is used to sustain credit lines on normal terms to solvent businesses,” Mr. Brown said. “I urge banks not to change the terms and charges for existing lending to small and medium-sized enterprises.”

Mr Brown and Mr Darling have welcomed a commitment made by the European Investment Bank (EIB) to provide £4 billion to companies in the UK. But, they are being criticised by several MPs on all sides of political streams for failing to ensure that this money would be passed on by British financial institutions to the common man and businesses.

In fact, many small businesses have warned that they might not get anything about the loans, which the Government has promised, will percolate down from the EIB. Mr. John Wright, chairman of the Federation of Small Businesses, informed in a meeting that despite the talk of promises and help from the Government and banks, “the evidence contradicts the good intentions”.