Banks should be obliged to fund community projects and make credit available to marginalised customers, the head of the Republic's largest social investment fund has said.

The sector could be forced by the Government to divert some of its profits to schemes that alleviate poverty or offer training to long-term unemployed people, said Mr Paul O'Sullivan, chief executive of Clann Credo. Such funding might take the form of loans rather than straightforward donations.

"The Government should. . . introduce legislation to ensure banks' contribution in this area," Mr O'Sullivan said ahead of a conference today on confronting poverty through investment.

"In the United States and Britain, the banks are now major contributors in this regard. They are required to do so through the Community Reinvestment Act in the US and as a result of Treasury pressure in Britain."

Social funding was gaining currency across Europe and the US and it was time that Irish banks looked to their obligation to the wider community, he said, adding that some of the estimated €400 million savings that will accrue to banks following the reduction in corporation tax could be fenced off for social investment.

Clann Credo has built up an €8 million fund and is supporting 80 projects across the Republic, mainly through loans. "The financial resources available to banks would enable social investment to achieve the same level of development as, for example, the US, where it is now a €1.9 billion industry and is in receipt of €80 million direct federal grants and additional local state supports," Mr O'Sullivan said.

He will outline his vision at the conference in Dublin today, which will be opened by Mr Eamon O Cuív, Minister of State at the Department of Community, Rural and Gaeltacht Affairs.