BANK RATES

Evening Star, Issue 21079, 16 April 1932, Page 19

BANK RATES

—— ■ ~ ———— INTEREST OH ADVANCES REDUCTION ANNOUNCED [Per United Press Association.] WELLINGTON, April 15. It was stated by tho chairman of the Associi ited Banks to-day that the banks propose to nuiko reduction in the rate of interest on advances so as to bring the rate down on an average by i per cent., with a minimum rate of G per cent. The proposed reduction will involve a reduction in the deposit rates also, but until the Government bus decided upon tho reduction in the deposit rates for Government departments and others tho alteration in tho bank deposit rates cannot be made. The reductions of the bank overdratt rutb will take effect three months after tho alteration in deposit rates. The reason for this is that tho banks will continue to pav tho higher rates borne by current deposits for a period up to twenty-four months. Further, it will not be for fifteen months yet (that is, until July, 1933) that tho full benefit of the previous reduction in the fixed deposit rates made on August 1, 1931, will accrue to tho banks. Attention is also drawn to the fact that with the minimum advance or overdraft rate at 6 per cent, per annum and 5 per cent, per annum being payable on current twenty-four months’ deposits until July, 1933, there is a margin of only 1 per cent, in respect of tho latter. This,, however, is reduced by the incidence of the banks’ income tax of rather more than 8s 9d per cent, per annum on deposits and another 8s 9d per cent, on advances to below 2s (id per cent, per annum.