HIGH-Street banks cut net lending to non-financial companies by the highest amount this year in April, according to figures that may renew concerns about the supply of credit to businesses.

The British Bankers Association (BBA) said the amount non-financial companies repaid to leading banks net of new lending surged to £2 billion last month from £800,000 in March.

The net repayment in April ran well ahead of the £1.3bn average in the preceding months.

The data may raise fresh questions about the effectiveness of the official Funding for Lending Scheme. This was introduced by the Bank of England last August after claims small and medium-sized enterprises were struggling to access affordable credit.

"The increased drop in net lending to non-financial companies in April adds to the evidence that the Funding for Lending Scheme has so far failed to have any material impact in lifting bank lending to companies," said Howard Archer, chief UK economist at IHS Global Insight.

May's data will be studied to see if there is any sign reforms to the scheme announced by the bank last month have had any impact.

The bank said credit conditions have improved since last summer but this had been less marked for small and medium-sized enterprises than for larger businesses and households.

It extended the scheme by a year to January 2015 and "heavily skewed" the incentives to boost net lending towards SMEs.

Mr Archer noted the fall in net lending may reflect limited appetite for credit among firms during a period of economic uncertainty.

The BBA said: "Overall borrowing levels continue to fall as firms contain their finance requirements until more certain trading conditions and investment prospects emerge."

Other sources suggest activity may be picking up in some areas. Last month the Bank of England said net lending to SMEs excluding overdrafts rose by £239m in the UK in March. This was the first rise since August 2011.

Santander said yesterday it has increased lending to SMEs in Scotland by 55% in the year to March.The Spanish bank has recruited new relationship bankers in Scotland in response to demand.

BBA figures show consumers are cautious about credit.

Statistics director David Dooks added: "Low consumer confidence is depressing demand for new borrowing and consumers are continuing to save, with deposits rising by 5.5% over the year to April."

The outstanding level of unsecured borrowing contracted by 1.3% in the last year, said the BBA.

Net mortgage borrowing fell by £0.2bn in April, compared with £0.3bn in March.