For the first time, farmers in Australia can now offset the interest on their business loan using their farm management deposit (FMD), with an FMD Offset Account from Rural Bank.
We are pleased to congratulate Rural Bank on this innovative product, which has won a 2017 CANSTAR Innovation Excellence Award.
Legislative amendments that applied from 1 July 2016 onwards have removed the law that prevents an FMD from being used as an offset account against a primary production business debt (a farmer’s agribusiness loan).
What is the FMD Offset Account?
Rural Bank launched its FMD Offset account on 19 December 2016 to enable farmers to benefit from changes to the farm management deposit scheme.
The key benefit of this product is that as an offset account, it reduces interest costs on eligible primary production business loans, while still retaining the benefits of a farm management deposit (FMD).
This means the FMD holder can draw on their own funds in times of need without borrowing additional funds from their bank.
This provides customers with greater flexibility in their balance sheet, as they can set side pre-tax income from primary production during years of high income, which can then be drawn on in future years.
This can help farmers to manage their exposure to natural disasters, climate, and market variability, by helping them to put aside funds to use in rough times.
Standout Features of the FMD Offset Account
The main features of the FMD Offset Account include:
- Full offset: 100% of the FMD Offset Account balance is offset against the linked eligible Rural Bank Variable Rate Term Loan balance.
- Simple fees: One low upfront linkage fee is charged (per FMD Offset Account linked to an eligible Rural Bank Term Loan).
At the time of the award submissions, the Rural Bank FMD Offset Account is the only farm management deposit offset solution available in Australia.
This product is an innovative solution for farmers looking for new ways of managing their loans across seasonal highs and lows.
Every year, CANSTAR looks for the products being launched in the area of financial services to make our lives easier and more convenient. The products that CANSTAR judges to be the most innovative in their field are awarded a CANSTAR Innovation Excellence Award.
For more innovative and award-winning products, visit the CANSTAR Innovation Excellence Awards for 2017:
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