The Australian banking sector has assured that there will be no changes in the way they do business in areas affected by the implementation of the Murray-Darling Basin project.

There is no change to the way banks are dealing with their customers - farmers, businesses and individuals - in the Murray- Darling Basin.

The Australian Bankers' Association (ABA) was responding to a media report1 that banks are planning to foreclose on farmers as a result of the release of the Guide to the proposed Basin Plan.

Steven Münchenberg, Chief Executive of the ABA, said in a statement:"Banks are continuing their normal practice of managing all clients and new lending requests on a case-by-case basis, including irrigators in the Murray-Darling Basin. Banks are not foreclosing on customers due to the release of this Guide."

"Also, it is not industry practice for banks to use foreclosures to manage customers in financial distress and the ABA is disappointed that the media report implied this."

"Banks have a long history of working with farming communities through difficult periods, helping them to manage the impact of drought, floods and major policy changes from Governments."

"The Guide is a preliminary step, prior to the implementation of a Basin Plan which may not take effect until 2019. Until such time as there is an agreed way forward for all concerned, banks are unlikely to take any action in response to the development of a Basin Plan."

Mr Münchenberg said following the extended period of drought there will be some farmers in the Murray-Darling Basin whose businesses are no longer financially viable.

"We do not expect that the release of this Guide will change the way that banks manage these customers - their circumstances will be considered individually at this point in time," he said.

Banks are concerned about the pressure that the Guide and the Basin Plan process are putting on rural communities that have developed over many decades to support irrigated agriculture.

Banks are also a part of the business communities in the Basin and have been for over a hundred years. While the banking industry supports sustainable environmental management, the industry wants to continue to grow their businesses in these areas.

In implementing a Basin Plan, consideration needs to be given to how best to support communities which will be adversely affected.

Mr Münchenberg said: "We welcome the bipartisan support for the need to compensate farmers for reductions in water allocation."

"Not all of the funds from water sales may need to be used to pay out debt as farmers may decide to reinvest in their businesses."

"Where farmers choose to sell water, banks would consider proposals to reinvest in businesses that may have to adjust to having less water available. Further Government support might be warranted for this purpose."

"Also, how the Government buys back water will have to be carefully managed to avoid adverse movements in water values. The impact on customers will be considered on a case-by-case basis."