Update 6.25pm: €250million has been paid to tracker mortgage holders who were done out of low-cost interest rates by banks, the finance minister said.
Redress and compensation was made by the end of last year to 12,900 customers who paid too much for their loans.
They were identified by a Central Bank review and Paschal Donohoe warned banks should make further progress by March or face action.
The minister said: "This examination has laid bare the fact that very poor cultural and governance issues still exist within lending institutions in Ireland post the banking crash, and that if banks are to regain the trust of customers then they must be prepared to change their attitudes significantly.
"Customers of these lenders have been treated appallingly and in some severe cases have even lost their homes, either directly or indirectly, due to the shameful behaviour of their lenders.
"This behaviour is simply unacceptable."
The minister added: "As at end December, approximately €250million in redress and compensation has now been paid to 12,900 impacted customers as identified from the industry-wide examination, and this includes payments to 3,700 impacted accounts identified since last September."
This is on top of €47million paid before the start of the Central Bank's industry-wide examination of 15 lenders two years ago.
The mistake affected major financial institutions including Ulster Bank, Bank of Ireland and KBC.
All the banks have offered apologies.
Mr Donohoe told a meeting of the Joint Committee on Finance, Public Expenditure and Reform and Taoiseach that he expected a further update from the Central Bank on the basis of data at the end of March.
"If further sufficient progress regarding the payment of redress and compensation to impacted customers has not been made at that point, the Government will be prepared to consider further possible actions."
Customers have been treated appallingly due to the shameful behaviour of lenders, Mr Donohoe added.
"The prompt payment of remaining redress and compensation payments to outstanding impacted borrowers is now a key requirement, and indeed it will be a practical demonstration of the regret that banks are now expressing for the harm they have inflicted upon their impacted tracker borrowers."
Sinn Fein TD Pearse Doherty said those affected wanted accountability.
"They want somebody to pay the price, somebody to be held responsible. They don't want this swept under the carpet."
He added: "It is pathetic, the type of compensation being offered by the financial institutions."
The minister said he had no interest in sweeping the matter under the table.
"What happened was wrong, the many people affected by this and suffering caused was unconscionable."
Update 4.16pm: Central Bank will punish banks over tracker mortgages if necessary
The Finance Minister says he believes the Central Bank will punish banks and individual staff over the tracker mortgage scandal if their review deems it necessary.
Paschal Donohoe is appearing before the Oireachtas Finance Committee to discuss the ongoing tracker scandal which has seen almost 34,000 customers affected.
Minister Donohoe says customers were treated appallingly by their lenders, and he says appropriate compensation must be paid out urgently.
He added that if banks were found to have done wrong, they would be brought to task.
“They (the Central Bank) have the powers to sanction both an organization and individuals,” said Mr Donohoe.
“From engaging with the Central Bank extensively on the matter, I have no doubt at all that if they reach a finding they are confident they can stand over in relation to either individual or collective failure, they will sanction accordingly.”
Original story (6.56am): The Finance Minister Paschal Donohoe will appear before an Oireachtas committee today to be questioned about the tracker mortgage scandal.
A proposed Irish Banking Standards Board will be discussed, as well as compensation plans for victims.
The total number of customers caught up stands at 33,700 with just under €300m in redress paid out as of mid-December.
Ahead of today's meeting, Finance, Public Expenditure and Reform Committee chairman John McGuinness says they are keen to ensure the Government plays its part in resolving the issue.
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