The Labour Party wants retail banks to begin offering low- or no-interest loans to beneficiaries and those on low incomes so they don't have to use loan sharks.
Government legislation has been introduced to Parliament aimed at clamping down on unscrupulous lenders.
It stipulates that they can only lend money to people who can afford to make the repayments.
However, Labour said on Monday the bill does not go far enough.
Social development spokesperson Jacinda Ardern says small loans of up to $3000 could be offered to those previously denied a bank loan.
"We're proposing a partnership between government and the private sector, predominantly our mainstream banks for instance, bringing in community organisations and collectively ensuring that those lines are available.
"Ultimately, this is asking mainstream lenders to take on corporate social responsibility really."
