(Adds details and background on inquiry recommendations) March...

(Adds details and background on inquiry recommendations)

March 15 (Reuters) - National Australia Bank (NAB) said on Friday it would expand the threshold for small business protections and would work with regulators to implement other key recommendations of an inquiry into financial-sector misconduct.

Australia's fourth-largest bank said it would extend its definition of small businesses to those with aggregate borrowings of less than A$5 million ($3.5 million), up from less than A$3 million.

In its final report last month, the government-mandated inquiry recommended banks be required to broaden the definition of small businesses so that more borrowers would benefit from protections when they experienced hardship.

NAB acting CEO Philip Chronican said the company had completed or was in the process of implementing 26 of the inquiry's 76 recommendations.

($1 = 1.4148 Australian dollars)