The Commonwealth Bank has bowed to federal pressure and will allow credit adjustments for eligible farmers caught in tough times.
Agriculture Minister David Littleproud welcomed the move on Friday after earlier challenging the bank to offer the measure to help drought-stricken farmers.
Commonwealth Bank will offer a credit adjustment for customers with eligible farm management deposits and business loans.
“I commend CBA on its strength of character,” Mr Littleproud said.
“Yesterday I gave them an uppercut but today they deserve a bouquet. They showed courage and leadership.”
The bank’s executive general manager of regional and agribusiness banking, Grant Cairns, believes the move will give farmers additional peace of mind.
“Our priority is helping farmers who are doing it tough because of the drought,” he said in a statement.
The mechanism allows primary producers to remove money from their taxable income during good years to use during tough times.
Rural Bank, NAB and CBA now offer farmers the ability to have farm management deposits used as offsets against their loans but ANZ and Westpac don’t.
“I hope ANZ and Westpac have announcements coming on this issue,” Mr Littleproud said.
Earlier in the week, the Commonwealth Bank donated $2 million to drought relief.
That includes $1.75 million to the Australian Red Cross’s national fundraising appeal while $250,000 will support charity Rural Aid’s Buy a Bale program.
The bank made nearly $10 billion profit last year.
Mr Littleproud said the message on farm management deposits was sent loud and clear to the banks at a recent drought meeting in Canberra.
But Labor’s agriculture spokesman Joel Fitzgibbon accused the government of inaction on drought since coming to power in 2013.
“I’m tiring of Turnbull government ministers blaming everyone else for the situation we now find ourselves, having done next to nothing over the course of the last five years,” he told AAP.
He has unveiled a drought mitigation policy which uses agricultural research and development corporations to help farmers build defences against climate change.
If Labor wins the election, it would pursue a Commonwealth-state drought relief agreement.
“This is not something that’s going to help a farmer tomorrow or next week or even next month,” Mr Fitzgibbon said.
“But if we’d done this work over the last five years, people would be coping much better with drought.”