OVERDRAFT CHARGE

Press, Volume C, Issue 29623, 20 September 1961, Page 14

OVERDRAFT CHARGE

Board Seeks Relief Local authorities were in a different position from ordinary commercial undertakings, the Christchurch Drainage Board proposed last evening when discussing the trading banks* new service . charge for overdrafts. It agreed to seek 'some relief •from its own bank, the Bank of New Zealand. The board’s fee would be ’ £5O. the maximum, the finance committee said. Ali though the board’s general account could be in debit, there was often a very large ■ credit in the loans account. The bank was apparently not i prepared to take this into , consideration when calculati ing the fee, and the board • could not use loan funds to . assist its overdraft without contravening the Local . Authorities Loans Act. The board ran at an over- ■ draft for a considerable part ’ of the year, but the position was rectified once the payi ment of rates began, so there i was no risk involved for the , bank. The board's account i must finish the year in credit. : Agreeing to ask the bank i for relief, the board also de- ■ cided to approach the Min- • ister of Finance (Mr Lake) for the act to be amended to I allow loan funds to be used i to offset an overdraft in a i local body’s general account. “A perusal of the banks’ ' balance-sheets would not i justify the charge on . that i score.” said "'r R. C. Neville. , of the bank’s statement that t costs involved in the ad- > ministration and services of ! overdrawn accounts were not i adequately covered by existing charges.