Bank Facilities For Exporters

Press, Volume CIV, Issue 30919, 27 November 1965, Page 24

Bank Facilities For Exporters

(New Zealand Press Association)

WELLINGTON, Nov. 24

New Zealand trading banks have been authorised to allow letters of credit calling for draft usances of not more than 180 days.

This was announced today by the Minister of Overseas Trade (Mr Marshall) who said this would assist in making provision for exporters to cover the period between the shipment of exports and payment.

Requests for longer periods must be referred to the Reserve Bank for consideration. Mr Marshall said he had been making an examination of the matter at the request of the Trade Promotion Council.

Bank facilities were especially necessary for exporters because there was frequently a substantial delay between the export of goods and payment by the purchaser, said the Minister.

There was, moreover, a tendency these days of strong international competition for export markets for buyers to require extended credit terms.

Mr Marshall said the Government realised that New Zealand exporters must be in a position to meet such competition consistent with sound commercial considerations.

Establishment of the Export Guarantee Office was a recognition of this need.

“For many years the Reserve Bank, in administering exchange control, has adopted the general rule that proceeds of export, shipments should be returned through the banking system within a maximum period of six months.

“In the case of exports to certain countries, it is the banks’ policy to limit credits to 120 days from date of shipment,” said Mr Marshall. He emphasised that the banks were not inflexible on this, and they were prepared to grant longer terms where circumstances warranted.