INTEREST CUT

Hokitika Guardian, 18 April 1932, Page 5

INTEREST CUT

BANKS PROPOSAL

OVERDRAFT MINIMUM.

(By Telegraph—Per Pres- Association )

\ WELLINGTON, April 15

It- was stated by -the chairman of ,the Associated Banks to-day that the banks propose to make a the raito of interest on advances so? as to bring the rate down, on an average, by .[ per cent.; with a- minimum rate of 6 per cent. The proposed reduction will involve a reduction in deposit rates also, but unbil the Government lias decided upon a reduction in deposit rates for Government departments and others, the alteration in bank deposit rates cannot be made.

The reduction in the bank overdraft rate will take effect three months after the alteration in deposit rates. The reason for this is that the banks will continue to pay higher rates borne by current deposits for a period up to twenty-four mouths. Further, it wi 1 not be for fif -een months yet (that is, until July, 1933) that the full benefit of the pievious reduction in .the fixed deposit races made on August 1, 1931, will accrue to the banks. Attention was also drawn to the fact that with the minimum advance or overdraft rate at 6 per cent, pea 1 annum and 5 per cent, pqt annum being payable on curved; twenty-four mouths 'deposits until July, 1933, there is a margin of only 1 per cent, in respect of the latter, This, however, in reduced by the incidence of the banks’, income tax of rather more than 8s 9d per cent, per annum on deposits and nnothei 8s 9d per cent, on advances to below 2s 6d per con:, per annum.