BANK INTEREST

Nelson Evening Mail, Volume LXVI, 16 April 1932, Page 7

BANK INTEREST

RATES TO BE REDUCED (By Telegraph—Press Association) WELLINGTON. 15th April. It is learnt from the chairman of the Associated Banks to-day that the banks propose to make a. reduction in the rate of interest on advances so as to bring the rate down on the average by per cent, with a minimum rate of 6 per cent. This proposed reduction will involve a reduction in deposit rates also, but until ’ the Government has decided upon the reduction in deposit rates for Government Departments and others, in pursuance of legislation now before Parliament, the alteration in the bank deposit rates cannot he made; and the reduction of the.bank overdraft rate will take effect three months.after the alteration in the deposit rates. The reason for this is that the banks will continue to pay the higher rates borne by currentdeposits for a period up to 24 months; further, it will not be for 15 months yet (that is, until July, 1953) that the full benefit of the previous reduction in fixed deposit rates made on .Ist August, 1931, will accrue to the banks. Attention also is drawn to the fact that with the minimum advance or over- « draft rate at 6 per cent, per annum, and 5 per cent, per annum being payable on current 24 months deposits until July, 1933, there is a margin of but 1 per cent, in respect of the latter (and their total is considerable). This, however, is reduced ' by the incidence of the banks’ income tax of rather more than 8s 9d ' per cent, per annum on the deposits and another 8s 9d per cent, on the advances, to below 2s 6d per cent, per annum.