Political intervention will not benefit Australia's banking customers, according to leading figures of the nation's banking industry.

Instead of criticising the industry for its business policies, the government needs to understand that profitable banks were key components for Australia to maintain its excellent credit standing, according to Future Fund chair David Murray.

Mr Murray is reacting to the accusations hurled by Federal Treasurer Wayne Swan that Australian banks were protecting their 'vested interests' in insisting that lower interest rates should not be automatically passed on to customers.

The Reserve Bank of Australia (RBA) is expected to reduce the country's cash rate on Tuesday but its good effects will not be felt by many as major banks have initially flagged their reservation to pass on the cut backs to their clients.

For a 'hugely profitable' sector, Mr Swan criticised the banks for its stance, which he characterised as "pushing a pretty tough line behind the scenes," for refusing to reflect the country's official rate.

Mr Murray, however, called Swan's remarks as unnecessary and warned that his actions border to intervention.

"What governments need to be concerned about is whether the banking sector is efficient, whether it is competitive and whether it is prudently run so it doesn't become a liability on the taxpayer," Mr Murray was quoted by ABC as saying during an interview.

mr Swan, Mr Murray told The Australian on Tuesday, is resorting to bank-bashing, which he said would only create an environment where credit availability will not be too fluid, especially for small- and medium-size business operations.

That eventuality, he warned, could lead to job losses and hurt the economy in general.

Mr Murray reminded too that the banking sector is the backbone of the economy, funding its functions, including government programs, which explain why its balance sheets must contain considerable profits.

"One of the reasons they have to make a lot of profit is that the government regulates their capital through the bank regulator and to keep that capital in tact they have to make a profit at the same rate each year as the growth of their balance sheets," Mr Murray told The Australian.

And he found an ally on Australian Banking Association (ABA) chief executive Steven Munchenberg, who told ABC that banks were pressed notions to extend assistance to households and businesses while at the same time ensure that banking system remains healthy.

On his part, Mr Swan clarified that he's into the business of destroying banks' reputation but only performing his duty of encouraging "a stable, strong and profitable financial system."

He stressed that there is no justification for banks to not pass on the rate cuts in the event the RBA decides to roll out such policy on Tuesday as "banks remain very profitable, with very healthy returns on equity and net interest margins."

Mr Swan said he could not blame the fury coming from banking customers if banks will not heed RBA's policy and cushion the impact of such measures "we have put in place a capacity for people who are not happy to walk down the road and get a better deal."

The deputy prime minister lauded the National Australia Bank (NAB), which had indicated earlier that its standard variable rate for this year will be mostly in line with RBA's policy rates.

"It was good to see the commitment from the NAB today to be lower than any of the other major banks," Mr Swan told The Australian.

His Liberal counterpart, opposition treasury spokesman Joe Hockey, however cautioned that while banking competition will be generally good for Australia, government policy should ensure too that the banking meltdown seen in Europe will not be repeated here.