Interest-limits legislation

Press, 2 August 1977, Page 7

Interest-limits legislation

PA Wellington Legislation implementing Budgetary provisions to allow trustee savings banks and private savings banks to set their own interest limits has been introduced into Parliament by the Minister of Finance (Mr Muldoon). The Trustee Savings Ranks Amendment Bill and the Private Savings Banks Amendment Bill are in line with the Government's policy to promote competition among financial institutions. Savings banks will be given the freedom to set the structure of. and the interest rates on. investment and other term deposit accounts. The Trustee Savings Banks Amendment Bill abolishes the upper limits on which depositors’ funds do not earn interest in certain categories. The legislation repeals the 5:40.000 limit where the depositor is an institution, and the $12,000 limit in any other case. A section of the principal act providing for interest not to be paid on farm ownership accounts of more than $60,000 is retained under the amending legislation. However, provision is

made for the $60,000 limit to be increased by Order-in-Council. The legislation also repeals that section of the main act which stipulates that except as provided in regulations, no depositor may have more than one account of any class of accounts. A section of the original act on investment accounts is abolished, and a new section is added. This provides for a trustee savings bank to receive investments by way of deposits in investment accounts, ‘ being deposit accounts where deposits are for a specified term of not less than 30 days, and in respect of which a lower rate of interest is payable on money withdrawn before the expiry of the specified term.” Trustee savings banks can also receive investments in term deposits — deposit accounts where the fixed term of the deposit is not less than 30 days. The Opposition spokesman on finance (Mr Tizard) described the bills as a recognition of continuing inflation. “The size of deposits on which interest can be paid reflects those facts,” he said.