BANK LOANS HELD

Press, Volume CX, Issue 32349, 15 July 1970, Page 32

BANK LOANS HELD

(N Z. Press Association)

WELLINGTON, July 14. The Minister of Finance (Mr Muldoon) today ruled out any increase in trading bank lending limits in the near future, .on the ground that a relaxation of credit policy would ieopardise Budget meas- | ures to control inflation. Replying to a question in Parliament today from Mr J. F. Luxton (Nat., Piako), the Minister said there had been continuous heavy pressure on trading bank lending for the last two years. The last time bank ad-

vances to the non-export sector were within their official ceiling had been in July, 1968.

“The ceilings for 1969 and 1970 were set to allow an annual growth rate of about 8 per cent, but, as advances had already exceeded their permitted level, the actual increase allowed was considerably less. “Hence, credit must stay tight if future ceilings are to be achieved,” Mr Muldoon said. The Minister said he was aware that there were many worth-while lending propositions which the banks were unable, to accommodate within the permitted growth rate. But at present any relaxation in credit policy would jeopardise measures already introduced in the Budget to

reduce the pressure on resources.

Total advances, including the export sector, had increased over the last 12 months by s9om, or almost 16 per cent. Mr Muldoon said many comparisons could be made which purported to show a declining role for trading banks in the economy. But all these ignored the changes in trading bank activities from 1964 and 1965, when the banks formed savings banks and acquired interests in finance companies.

“This,” he said, “considerably increased the scope of their lending and borrowing in the over-all picture.”