BUILDING SOCIETIES

Hawera Star, Volume L, 24 October 1930, Page 5

BUILDING SOCIETIES

SHORT-TERM DEPOSITS

SERIOUS THREAT TO EUSINESS FINANCIAL CLAUSE AMENDED. (By Telegraph-Special to "The Star. ) WELLINGTON, Oct, 24. Though the Government during astrenuous sitting of. over 34 hours carried through its I? mance Bill to the 60th clause without amendment, the final one relating to building societies, was very materially altered on the strong representations ot members from all sides. The clause sought to impose a restriction on those societies which have trespassed on the province of savings banks by taking deposits at interest for shorter periods than three months, a lull it proposed to make thus illegal except when specially authorised by the Minister of Finance. The clause was not intended to apply to short-dated deposits already held by building societies. The final clause was not readied in committee until yesterday afternoon, when Mr H. Holland (Christchurch North produced several telegrams from Christchurch building societies whose operations, he said, would be severely restricted by the proposed legislation. Mr D. Jones (Mid-Canterbury- declared that some of the societies, might be ruined by this interference, anti Mr J. Hogan (Rangitikei- described the usefulness of the system under which mortgagors could temporarily invest their mortgage money pending progress payments on their homes. .But l for the services of the ‘building societies in taking short-dated deposits at call these people would suffer a serious loss. Mr J. A. Nash (Palmerston North) expressed the opinion that the- clause would force some societies to wind up. When local bodies’ overdrafts were restricted by law they were given 12 months’ notice cf the proposed change and were able to adapt themselves to it. He appealed to the Government to hold over the legislation until next session as he agreed with the previous speakers that not half of the building societies of the country knew of its existence.

The acting-Prime Minister replied that it was not intended in any way to hamper building societies doing genuine business, but it had come under the notice of the Treasury some years ago that certain societies were doing savings bank business, though they were not subject to the safeguards imposed on private* savings banks, which had a limit to their interestbearing deposits, where as building societies had no such limit. The clause 1 restricted their short-term deposits to three months, excepting where the Minister made a special authority for a shorter term. After further discussion the Minister agreed to* accept the suggestion for a postponement, hut with a view to ascertaining the extent of the irregular short-term deposits with building societies he asked the committee to agree to the adoption of one sub-clause which renders it necessary for building societies to show separately in their balance-sheets the total amount of de-l posits and l loans repayable on demand within a period of three months. This was agreed to.