It looks like that securing a deal with the Australian Green Party on the newly House-approved mining tax came with a heavy price for banking customers, Australia's banking alliance said.

Prime Minister Julia Gillard's deal with the Greens, according to the Australian Bankers' Association (ABA), will spawn higher loan interests to be shouldered by banking clients and in the long-run, hurt competition in the industry.

Such scenarios, the ABA said, will happen because Ms Gillard decided to postpone the government's plan of phasing out the interest withholding tax being imposed on foreign banks until 2015.

Ms Gillard argued that the move will deliver some $130 million of savings to the federal government, way beyond the amount it requires to fill in the void created by deals struck with independent MPs in exchange for their support on the minerals resource rent tax (MRRT).

Ms Gillard was hard-pressed to come up with the money following the Greens insistence that their support on the mining tax will hinge on the realisation of the funds, the ABA said.

However, while the government won the Greens backing for its tax proposal, the bankers' group claimed that its decision to delay the removal of the interest tax would render Australia's banking environment somewhat inhospitable for foreign players.

"There are big competitive gains to be made from removing interest withholding tax which would benefit Australian consumers," ABA Chief Executive Steven Munchenberg was reported by The Daily Telegraph as saying during a Thursday interview.

"If the government was sincere about competition then it would accelerate this tax measure rather than defer it," Mr Munchenberg added.

Senior members of the Parliament have expressed their outrage on what they call as Ms Gillard's over-accommodation of demands pushed forward by the Greens, which they added supported the MRRT conditionally anyway.

Greens leadership, in fact, has explicitly expressed intents to push for further amendments of the new mining tax, the senior ministers reminded the prime minister, which underscored the party's agenda of squeezing more out of the MRRT debate.

And while they do that, other sectors, such as the banking industry, bear the raw end of the deal, the ABA said, as the government was forced to comply with fantastic demands in hopes of passing its landmark legislation.