A pilot microcredit scheme for people in receipt of social welfare payments is to be rolled out nationwide.

Launched last November through the credit union network, the ‘It Makes Sense’ loan scheme is designed to combat the extremely high interest rates from moneylenders.

People will be able to borrow between €100 and €2,000 at a maximum interest rate of 12% through participating credit unions.

Commenting on the initiative, spokesperson for MABS Michael Culloty said the national extension of the personal microcredit scheme is hugely important, especially for people in crisis situations.

Speaking on RTÉ’s Morning Ireland, he said he hopes all credit unions will take on this loan so credit is available quickly to those who do not currently have access.

MABS was initially created for those caught up in money-lending problems.

Mr Culloty said: "The Central Bank's latest statistics show 360,000 people use legal moneylenders and there can be up to 200% interest and collection charges."

He added there is evidence of illegal moneylenders, particularly in the travelling community and areas of deprivation.

Mr Culloty explained the personal microcredit scheme works simply, in that "if you need a loan you go to the credit union, ask for it, and even if your credit rating isn't good, and perhaps have defaulted, you will be considered.

"You will be given an answer and a possible loan within 24 hours."

He said affordability is very important and payments are deducted at source from social welfare.

"Everyone who can afford it will get one of these loans. Feedback from unions is that it is a very good product and those who access the scheme felt a 90% satisfaction with process and outcome.

Mr Culloty added that the loan scheme is more than just a monetary outcome.

"These are people who have been excluded from credit and banking and here they are now being included."

Minister for Social Protection Leo Varadkar said a trial of the scheme revealed the vast majority of the loans were given for debts on bills or new courses.

Speaking on RTÉ's News At One, he said that 96% of people had paid the loan back in full.

The minister said it is not known how moneylenders could be banned, and said they are charging high interest rates because they are commercial entities.

The Government setting maximum interest rates "would not be the right way to go", he added.