Australian bankers anticipate no major problem to be spawned by the Senate inquiry on the sector, expressing even full cooperation when required by the Parliament.

According to Australian Bankers' Association (ABA) chief executive Steven Munchenberg, the industry welcomes the investigation, which was sparked by major banks' decision in February to go against the rate polices implemented by the Reserve Bank of Australia (RBA).

The RBA has so far imposed rate cuts and holds from November to March but giant Australian banks refused to pass on the benefits to their customers, hiking instead their mortgage rates.

One by one, the so-called Big Four - namely Australia-New Zealand Banking Group (ANZ), Commonwealth Bank of Australia (CBA), National Bank of Australia (NAB) and Westpac Group - lifted their rates last month amidst oppositions aired both the public and the government.

Banks argued the rate hikes were largely spurred by the rising funding costs, crucial for them to provide home loans, plus the need to protect the industry's credit rating by maintaining considerable profit margins.

The RBA has pretty much supported the banks' decision but Australians sustained their criticism on banking practices, specifically the high pays that executives collect.

Munchenberg has acknowledged that banks were having a tough time convincing the public on the merits of their decisions, conceding that trust for now is not given to the sector by Australians.

"We have to do a lot more work to explain why we need the levels of profitability that we do," Munchenberg was reported as saying by The Courier-Mail during a conference held in Brisbane on Wednesday.

"For most in the community, banks are seen as powerful and greedy," he added.

The industry intends to begin that work by cooperating with the Senate committee conducting its probe, the ABA chief said, adding that he's more than willing to appear before the legislative body and furnish the required information.

However, Munchenberg stressed too that part of the problem must be attributed too on the general policy of the federal government, specifically on how Federal Treasurer Wayne Swan has been handing the situation so far.

Unnecessary pressures applied by the government on the industry, Munchenberg claimed, led to the false impression that banks were compelled to lift rate hikes and caused extra burdens to consumers.

"It is highly ironic that attacks on the industry from politicians could actually increase the cost of money to Australian banks," the ABA chief noted.

This was confirmed by representatives of major banks, stressing too that Swan's pronouncements would not influence their policies.

If rates were being moved up by banks, it would be due to the higher price that banks need to raise in accessing offshore funds, which they mostly use in their lending operations, according to Mortgage Choice chief executive Michael Russell.

"That (rising funding costs) is the driving force," Russell told the publication.