The Bankers Association says talk of a $10 billion fund to invest in struggling businesses is too optimistic.
A joint Government - banking fund was among the ideas put forward at a jobs summit last Friday.
Association chairman Graham Hodges says there is a need for such a fund, but it should start off much smaller.
He says suggestions that the Government and banks each contribute $1 billion dollars in equity may need to be scaled back.
Mr Hodges says banks need to be mindful of their own capital as the downturn worsens and there are issues around who would run such a fund.
Prime Minister John Key says officials are working on proposals from the summit and will meet its leaders again in six weeks.