RBS answers Darling’s call

Chancellor Alistair Darling has been calling for the banks to make changes that will help the real economy through the recession and to pass on recent interest rate cuts.

Royal Bank of Scotland (RBS) has responded by announcing a freeze on overdraft charges for small businesses.

This move has been partly in response to complaints from small businesses who have seen interest rates on loans actually increase during the period.

From the start of next month, all the overdrafts that are held will be interest free for 12 months, with no urgency on repayments due to fact that complaints have focused on huge hikes in interest rates of overdraft facilities simply being withdrawn all together.

The Treasury has had some say in the move, due to the fact that the part-nationalisation of the bank has meant that RBS were in a position to lead the way to help their 1.1 million business customers survive the downturn.

Stephen Alambritis, of the Federation of Small Businesses, said that up to now, banks have been slow to react, although once the first has moved and taken action, it is hoped that the rest will follow suit to rescue many small businesses.

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