INTEREST ON OVERDRAFTS.

Taranaki Daily News, 13 May 1922, Page 12

INTEREST ON OVERDRAFTS.

LOWER RATE IN LONDON. A New Zealand firm with, a branch in Wanganui had occasion to approach its bankers with a view to getting a reduction of interest on its overdraft, but the bank could hold out no better promise than seven per cent. The firm negotiated in London, With the result that its requirements have been met at five per cent. A leading banker, referring to this, remarked that he had read it with great satisfaction, and that he hoped that manj’ more business people and others indebted to the banks would borrow outside the Dominion in order to reduce their overdrafts here. He added: “In increasing the overdraft rate to seven per cent, the banks had mainly in view the forcing of customers, who were in a position to sell assets or to borrow against them, to do so. It now seems that one customer, at any rate, has done this. It is' quite, possible, in view of the present abundance of money in London, to borrow at five per cent, for short dates against gilt-edged and readily realisable stocks, such as Imperial Government securities. It by no means follows, however, that people can borrow in London at anything like such a low rate as five per cent, against such securities as banks in New Zealand have been I >- ed to accept in order to help theii tomers through the present finure. ial stringency in the Dominion. In fact, there are many customers to whom the banks have rendered assistance, who could not borrow money in London, even at 10 per cent.”