26 February, 2009

Some local authorities have proposed to open up their own new banks to facilitate small businesses. These banks will help people running small businesses in obtaining finance that are struggling for getting finance under current rigid lending policies.
Some councils have decided to carry out strict checks on the monetary conditions of such businesses to make sure that that it is feasible to issue loans to them. Two such councils are Birmingham City Council and Essex County Council, that have decided to set up their own banks.

It is reported that rules regarding the process of opening up new banks and as to which companies are to be allowed to borrow money, are not yet been decided. Further, banks will not be accepting any deposits.

Recently, an Essex County Council official said that they will be carrying out a thorough evaluation of the risk involved and employ banking people alongwith local government officials.

Another official, who is a Birmingham official, emphasized that the local government should aid to their communities.