OVERDRAFT LIMITS

Press, Volume C, Issue 29625, 22 September 1961, Page 15

OVERDRAFT LIMITS

Fall In August The continued buoyancy of economic activity during August sustained the demand for bank accommodation and advances fell more or less seasonally, the New Zealand Bankers’ Association research directorate reports. The report says that total credit limits (advances plus unexercised overdraft authorities), however, fell by more than £4m, reflecting the tight lending policy which the trading banks are pursuing in accordance with Reserve Bank directives. "At the end of August and in subsequent weeks the trading banks have been compelled to borrow substantially more from the Reserve Bank than in previous months.

"On September 13, for example, trading bank borrowing was in excess of £23m. as compared with £lsm which has been the normal level since April. "If the trading banks were subjected to this additions pressure for long, they would be forced to virtually cease all new lending for whatever purpose, as the only means of intensifying their already restrictive policies. “In the normal course of events no rapid decline in advances can be expected until the rate of importing slackens and stocks level off.” The report shows that advances and discounts at September 6 stood at £221 .Rm, compared with £217.5m' on August 30. and £174.1m a year ago. Unexercised overdraft limits at August 30 amounted to £ 120.6 m, compared with £ 123.7 m on July 26. 1961. and £133.7m on August 31, 1960.