TRADING BANK ADVANCES

Press, Volume LXXXVI, Issue 26121, 25 May 1950, Page 4

TRADING BANK ADVANCES

Controls Again Eased STATEMENT BY MR HOLLAND From Our Own Reporter WELLINGTON, May 24. Controls over advances by trading banks have again been eased. This was announced by the Prime Minister (Mr Holland) to-night. Advances for the purchase of livestock for primary production or for the purchase of farm machinery, vehicles, and implements or for the purchasing of tools of trade, whether in primary or secondary industry, may now be made without limit from trading banks and without reference to the Reserve Bank. Advances of up to £2OOO may be granted by trading banks at their own discretion, irrespective of the purposes and without limitation on the period of repayment. Advances of more than £2OOO and up to £4OOO may be made by trading banks without reference to the Reserve Bank if the purposes are within the scope of existing policy on the control of advances. This is understood to preclude advances for speculative purposes and for the repayment of mortgages and hire-purchase agreements. Advances for capital purchases, such as farm property and industrial machinery and premises, are still subject to control unless the advance comes within the £2OOO limit, which has now been freed from control. “The Government feels on firm ground in taking this further step along the road to ultimate freedom.” said Mr Holland. “Conditions do not yet warrant the complete removal of control over all trading bank . dvances. “The reason for retaining control over capital purchases is that such advances could represent a huge capital outlay. We must first watch the effect of the exemptions now being made. “Nevertheless, every application for an advance will continue to be treated on its merits, with special regard for the economic value of the project and the practicability of raising the necessary finance from non-banking sources. “In keeping with the new circumstances the amount within which trading banks are empowered to exercise their own judgment in applying the principles of advance control without reference to the Reserve Bank tas been extended by a further £2OOO to a maximum of £4OOO. This is to allow for the fact that the initial £2OOO in all advances has now been freed from control.”