REDUCTION OF INTEREST

Hawera Star, Volume LII, 27 February 1933, Page 7

REDUCTION OF INTEREST

RELIEF IN DOMINION ASSOCIATED BANKS WILLING OUTLINE OF CONDITIONS INCOME TAN ADJUSTMENT (By Telegraph—Press Association). WELLINGTON, Feb. 27 ; The Banks are willing to provide additional relief by way of further reduction of interest rates if, to enable them to do so, some reasonable and fair alterations are made in respect of their income taxation and if the Government rates for deposits are suitably reduced, said the chairman of the Associated Banks, Mr J. T. Grose, when Iris attention was drawn 'to a statement made in the House of Representatives ou Saturday concerning the rates of interest on overdrafts.

He pointed out that since 1931 the banks’ minimum overdraft rate had been reduced altogether from 7 to 6 per cent, and lie contended that in the iggrcgate the bank overdraft rates had been reduced at least 20 per cent, during the past 19 months. It had been suggested by -some people, he said, that reductions in fixed deposits rates should apply to current as well as subsequent deposits, but such a course would be abhorrent to the banks and, if adopted, would lead to a flight, of capital and do the Dominion incalculable harm. It was noteworthy that in New ‘South Wales, where a permissive clause giving the banks the option of doing this was included in the interest reduction Act, not one of -the banks availed themselves of it. - The banks, who to-day were finding funds to enable the community and the Government to a la'rge extent carry on and were even facing loss in many instances rather 'than see deserving clients fail, would be adopting a short-sighted, unsafe policy were they further to reduce interest rates appreciably while .still remaining under an. unfair system which assumed that bank profits remained undiminished and which prohibited deduction from the taxable bank incomes of bad debts actually written off.