OVERDRAFTS DOWN

Press, Volume CI, Issue 29854, 21 June 1962, Page 15

OVERDRAFTS DOWN

Sharp Drop In May

Advances and discounts by the trading banks fell £ 10.2 m to £ 203.5 m in May. Releasing the latest figure for publication the research directorate of the New Zealand Bankers’ Association says that the steep fall in bank advances was resumed in May after a temporary halt in March and April. “Comparing May with April there was a £lO million drop in end-of-month advances and a £l3 million drop in the monthly average. Even allowing for normal seasonal movements there was a £5 million reduction in the average for the month “There is every likelihood of another substantial fall in bank advances this month but thereafter the level of advances is likely to stabilise at around £2OO million unless fresh pressure is exerted It is, however, hard to see how’ significant further reductions can be achieved without seriously affecting the economic situation of the country. Indeed, some relaxation of the credit squeeze would seem appropriate later in the year.” Recent reserve ratio changes have been:—April 19: 27 per cent, of demand liabilities, 10 per cent, of time Liabilities; May 18, 32 per cent,. 10 per cent.; June 1, 30 per cent., 10 per cent; June 8. 32 per cent., 10 per cent. For the next month a 1 per cent, change in the demand liability reserve ratio will mean a £2.75 million change in statutory deposits before allowing for variations in bank note holdings, the directorate Says.