NAB extends support for no-interest loan scheme to $15 m

In a move that will help more Australians access safe and affordable loans for essential household items, National Australia Bank (NAB) has allocated a further $5 million to the level of loan capital the bank provides to assist no-interest loan schemes operating across the country.

The additional loan capital takes the total provided by NAB over the past three years from $10 million to $15 million.

The unique No Interest Loan Scheme (NILS®) program offers safe, affordable loans to people and families on low incomes. NILS® loans are small – in the region of $800 to $1,000 – and are completely free of interest and fees. They are designed to help people and families purchase essential household items such as fridges and washing machines.

In addition, the NILS® loans program also provides borrowers with financial mentoring and helps to develop savings and budgeting skills. NILS® is Australia’s largest microcredit program.

“NAB is committed to helping Australians on low-incomes who are doing it extra tough in these times. A program like NILS can make a real difference to the lives of people and families suffering the enormous stress of having to go without basic household necessities,” said Lisa Gray, NAB’s Group Executive, Personal Banking.

“We expect that NAB’s $15 million will help 5000 more Australians this year, effectively doubling the number of interest-free loans the program will offer in 2009. Over time, the number should treble as the capital provided by NAB is progressively used,” she said.

NILS® is the only nationally coordinated, interest-free loan scheme currently available to low income earners in Australia. Developed by Good Shepherd Youth & Family Service 29 years ago, there are now over 280 accredited NILS® programs that in 2008 lent over $4 million to people in no-interest, no-fee small loans with a focus on asset building.

“For nearly three decades, the NILS® program has been helping Australians on low incomes to develop their financial skills to build their assets,’” commented Michael Yore, Executive Director, Good Shepherd Youth & Family Service.

“This additional funding from NAB will enable us to take NILS® to even more communities and support Australians experiencing the burden of financial exclusion,” he added.

With this new investment, the program’s expansion will also focus on communities experiencing increasing disadvantage including Aboriginal and Torres Strait communities, which is a focus shared by NAB and outlined in NAB’s Reconciliation Action Plan.

NILS® fast facts

As at 2009, there are 280 accredited NILS® programs across Australia, writing on average approximately 5,500 loans every year, totalling $4 million in lending.

Good Shepherd Youth and Family Service coordinates NILS® nationally and provides support to community partners who deliver NILS® as a local response designed to meet the needs of their communities.

NAB offers fee-free, unsecured and interest-free overdrafts to community organisations to lend to financially marginalised Australians under the NILS® program.

To date over 150 NILS® schemes have been allocated capital under NAB’s initiative. NAB expects that the increase in capital from $10m to $15m will see this support extended to over 210 NILS® programs across the country reaching 14,000 low income recipients a year once fully deployed.

Since 2003, NAB and Good Shepherd Youth & Family Service have worked with local community agencies and government; providing innovative microfinance solutions to help low income Australians access fair and affordable financial services.

NAB’s commitment includes a pledge of $130 million in capital ($30 million announced in April 2006 and $100 million announced in October 2009) to support lending to low income groups. NAB’s increased allocation to NILS® falls within these pledges.

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NILS® loan features

Amount: $800 - $2,000 (depends on individual program capacity)
Interest rate: 0% pa
Default rate: 3 - 5%
Loan term: 1- 1.5 years
Repayments: weekly, fortnightly or monthly
Loan purpose: fridges, washing machines, computers, household furniture, medical/dental, vocational education costs.

NILS® customer profile

Gender 72% female, 31% male, 7% couples
Age Majority aged 36-55 yrs old (under 25yrs the minority)
Loan Purpose 31% Fridges/Freezers; 28% Washing Machines; 11% Other Appliances; 7% Furniture; 6% Beds
Income source Majority on fixed income pensions. Approximately 6% in part-time or full-time work.
Other 21% Indigenous; 48% sole parents

For more information on NILS®:

For further information contact:

Felicity Glennie-Holmes
Media Manager
National Australia Bank
T: 03 8634 2910
M: 0412 673 038

Richard Peters
Head of Community Finance and Development
National Australia Bank
T: 02 9237 9827
M: 0438 582 919