This past week Mr. George Osborne made a declaration at the House of Commons. He said that the 4 largest and prestigious banks of the United Kingdom – the HSBC, RBS, Barclays and Lloyds have signed up to a project named Project Merlin. The agreement seems to be a good one for the banks as it is believed that the agreement will ameliorate the relationship between the government and the banks. It will also improve the relationship of the bank with the wider society.

There are some stipulations which are creating a concern. These stipulations are about the money lent to the SMEs. According to a stipulation an amount of 190 billion pounds should be lend in this year to the businesses and most importantly an amount of 76 billion ponds has to be given to the smaller businesses. This is primarily the cause for the concern.

In this context it should be kept in mind that the money being lent to the small businesses is of significance as the small businesses play a vital role in the economic recovery. Hence it is necessary that the small businesses be given the opportunity so that even they can taste success and move towards development and growth.

The only way by which the banks can make profits is that if they choose to lend the money to a particular range of loan seeker or borrowers. The rate of interest charged by the banks varies in accordance with the analysis made by the bank regarding the degree of risk which is being taken while providing the loans.

The banks were the subject of huge criticism after the financial crisis. The banks were blamed for having adopted a relaxed attitude towards the granting of loans. The banks also failed to evaluate the degree of risk which led to a failure in the risk management. The banks were moving in a quest for increasing profits but it finally ended with huge losses.