BNZ boss Angela Mentis has defended the banking industry after it came under fire from the Government for its handling of business lending.

Finance minister Grant Robertson last week criticised the sector after low take-up of the Business Finance Guarantee Scheme, a business loan scheme which is 80 per cent backed by the government.

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Robertson said in a statement: "It has become clear that the support that is available to our small and medium businesses from banks is not meeting their needs nor our expectations as a Government."

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That prompted the government to launch a small business cashflow loan scheme which will see loans of up to $100k made available to businesses with up to 50 employees directly from the Government via Inland Revenue.

The loans are interest-free if paid back in the first year and have a 3 per cent interest rate after that with the loans due to be paid back within five years.

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Asked about the criticism from Robertson, BNZ's Mentis told Mike Hosking on Newstalk ZB this morning: "I don't think anyone likes to hear that they are not playing their part and we very much are.

"We are all working constructively. The Government has moved at pace, the banks, we have absolutely all moved at pace and our people are working incredibly hard to help and support customers through this."

Mentis said the BNZ had helped about 18,000 of its business customers as well as 17,000 personal customers to the tune of $7 billion.

"We started working with our customers straight away. We have got extensive measures for our business customers. We have helped them across a whole range of things."

Reserve Bank governor Adrian Orr has also urged banks to be courageous in their lending during the Covid-19 pandemic.

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Mentis said they were doing so.

"We are absolutely being courageous.

"We have spoken with over 300,000 of our customers. I've been speaking with our customers from the week of lockdown. We are doing everything we can to support them to keep our jobs and we can absolutely show the measures we have been undertaking to support them."

Mentis some there some sectors that were "absolutely struggling" and the bank was doing everything that it could to support them.

"When we came out with our results last week we did talk about a double-digit decline for GDP for quarter two but with the government announcing moves for level 2 hopefully for next week, that will absolutely help the economy rebuild quicker.

"Even with level 3 I have spoken with lots of businesses that have gone back to work and that has been incredibly important too because they can start earning revenue and they can start supporting their customers and their staff as well."

Mentis said other business sectors were seeing growth opportunities.

"There are some sectors that are growing through this. We can see through our customers base as well, many of them have used this opportunity to look at their businesses as well and to adjust.

"We have seen many of them going to digital and we have been helping with that and we have been seeing some others use the opportunity to think about moving house as well."

Mentis said the Government's employer wage subsidy had been incredibly helpful and around 60,000 of its customers had taken up the subsidy getting $2.4 billion paid out.

"That is an enormous amount of money in the system, in addition to what the banks are doing. We have done $9.7b for mortgage customers, we have done several billion for business customers so it absolutely all supports keeping people in jobs and just helping those businesses come through this."

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