The State's bad bank, Nama, has cash reserves of more than €4.2bn, despite the country being "bankrupt", the Sunday Independent has learned.

The amount of cash Nama has in its accounts is considerably more than the entire level of cuts, €3.8bn, made in last December's budget.

The agency has refused to make the funds available for any sort of stimulus package as it wants to use the money to work with developers to help them finish projects, and also pay down Nama debt.

"The cash is not available for Exchequer stimulus purposes," a Nama spokesman told the Sunday Independent yesterday. "This cash will be used to finance working and development capital and also towards paying down Nama bonds as part of meeting the agency's €7.5bn repayment target by end 2013."

Nama is now going to be questioned about why it is sitting on the cash pile at the Oireachtas Finance Committee on Wednesday.

Fianna Fail's finance spokesman Michael McGrath said yesterday it was not Nama's job to be sitting on huge piles of money, but it was supposed to be cleansing the banks of their bad loans and enabling bad loans to be worked out over time.

"I will be raising the issue when the agency comes before the finance committee on Wednesday. On the face of it, it looks like an inefficient use of resources. Nama should not be sitting on billions of euro for the sake of it when the country is in the dire state it is in," he said.

The agency said: "Nama is conscious of the role it can play every day in stimulating economic activity and supporting jobs.

"It has already approved almost €1bn in advances to debtors to fund the completion of development work and debtors' working capital requirements."

Nama has also said the vast majority of the developers it has engaged with are co-operating, but it has confirmed that it has taken legal action against 214 debtors.

Under a new pilot incentive scheme, the agency said it would guarantee the mortgages of 175 properties in a bid to kick-start the housing market. If the scheme was successful, it said it could be rolled out to up to 700 properties.

Nama chairman Frank Daly said the initiative was designed to push renters, who were on the verge of buying, over the threshold.

Under the plan, interested parties will be asked to put a 10 per cent deposit on a property. The buyer will then have to qualify for a 90 per cent mortgage.

For the first five years of the mortgage, the buyer will make repayments based on the 90 per cent mortgage. After five years, the value of the property will be independently assessed. If the value has fallen by anywhere up to 20 per cent, Nama will write that percentage of the mortgage off.

Sunday Independent