Britain's Treasury chief has said banks must increase lending to businesses rather than boosting bonuses and dividends now that they have weathered the worst of the credit crisis.

George Osborne told the Sunday Telegraph newspaper that banks "have an economic obligation to assist" small and medium-sized businesses.

British banks received billions in taxpayers' money during the 2008 credit squeeze. Half-year figures released this week are expected to confirm that major institutions have returned to profit after two years of turmoil that saw them radically curtail lending.

Lloyds Banking Group, which is 41 percent owned by the taxpayer, and the 84 percent state-owned Royal Bank of Scotland are both expected to post a profit.

But Osborne said many British businesses are still having trouble getting credit.

"The danger is that, particularly next year, when there is a huge amount of refinancing required, that the small and medium-sized businesses suffer from a lack of access to working capital," he said.

Osborne said British banks "are in no doubt that the government wants to see reasonable access to credit on reasonable terms in the small to medium-sized business sector."

He said banks should avoid increasing bonuses and dividends down and spend the money on lending instead. He said that "if you maintain the remuneration and dividend levels of what they were a year or two ago then that would allow additional borrowing capacity."