OVERDRAFT AT 6 ½ PER CENT.

Shannon News, 22 July 1927, Page 3

OVERDRAFT AT 6 ½ PER CENT.

.MANAWATU COUNTY’S UNIQUE POSITION. Some time ago the Manawatu County Council completed a deed of hypothecation with its bankers over debentures for £SOOO at Gi per cent, to secure on its highways expenditure account and the recent increase in the bank overdraft-rate has disclosed that the County is in the unique position of having a registered daad reciting the rate of interest at 6£ per cent.

At yesterday's meeting of the County Council a letter was received from the Council’s bankers pointing out that it has not been the bank’s usual practice- in the past to name the rate of interest in the deeds of hypothecation taken from local bodies. The provision commonly inserted in the deed is one whereby local bodies agree to pay interest at such rate as is from time to time mutually agreed upon. Such rate is that charged by the bank on its ‘ ‘ best ’ ’ class of overdrawn accounts. In respect of advances already made the bank is bound to accept interest at per cent, “unless and until the County agrees, with the consent of the Finance Minister to pay a higher rate of interest.” The Council’s bankers 1 recognised the agreement based upon the expressed terms of the deed and avo- j uld like to meet the County as far as possible without departing from the agreement between the Banks whereby the lowest rate of overdraft at present is fixed at ‘7 per cent (except overdrafts against bank fixed deposits). “It would therefore seem to be impossible to con- < tinue charging 6J per cent, on this account -when the minimum rate is 7* per cent and that rate is being charged to other local bodies.” The Council’s ban- 1 kers; suggested that the Cbuneil should authorise the bank to endeavour to sell a certain number of debentures so that the loan account could be put in credit. The Council agreed to stand by its agreement with the bank to pay 6| per cent, interest and not to authorise the bank to sell any of its debentures. * The chairman (Cr. W. E. Barber): All agree to remain firm? Councillors: Yes.