The Minister for Families, Community Services and Indigenous Affairs, Jenny Macklin, said new approaches were needed to support people in building their own financial security.
“The funding will be used to develop the community development financial institution sector in Australia, which currently includes around ten institutions and up until now has had little government support,” Minister Macklin said.
“This includes looking at innovative ways to provide vulnerable people, who have the capacity to repay a loan but who are excluded from mainstream financial services, with access to safe and affordable credit.
“Services like these can be an important stepping stone to mainstream financial services and financial independence.”
Community development financial institutions
Community development financial institutions provide individuals and organisations that have been knocked back from mainstream banks and services with access to appropriate and fair financial products, such as loans with moderate interest rates.
“They typically cover their costs through government assistance, as well as philanthropic and private investment – bringing together government, business and community,” Minister Macklin said.
“We are keen to work with existing Australian community development financial institutions, mainstream banks and the philanthropic sector to develop the potential of the sector in Australia.”