Commonwealth Bank has donated $2 million to help farmers affected by the severe drought now affecting large parts of eastern Australia.

Of the $2 million, $1.75 million will go to the Australian Red Cross’s national fundraising appeal while $250,000 will support charity Rural Aid’s Buy a Bale program, the bank announced on Wednesday.

Throughout August, CBA branches will also be accepting public donations to the Red Cross appeal.

Commonwealth CEO Matt Comyn said worsening conditions prompted the donation.

“The drought is having a devastating impact on farmers and regional communities,” Mr Comyn said in a statement.

“Our donation will support the work being done by our local branches to provide much-needed help for farmers, including hay to feed livestock.”

The bank also announced it would not apply default interest rates on business term loans for customers suffering financial difficulty because of the drought.

CBA’s move comes after agribusiness bank Rabobank said on Monday that it would not apply higher penalty interest rates on loans in default due to drought.

NAB also announced a drought assistance package in July for customers in NSW and Queensland.

Ninety-nine per cent of NSW is in drought, according the state’s Department of Primary Industries, while Queensland’s Department of Agriculture and Fisheries estimates 57 per cent of that state is in drought.

Below average rainfall since April 2017 has been exacerbated by warm, dry weather.

On Monday, NSW Premier Gladys Berejiklian doubled the government’s drought relief package from $500 million to $1 billion.