CONTROL OF BANKS

New Zealand Herald, Volume 78, Issue 24134, 28 November 1941, Page 3

CONTROL OF BANKS

AUSTRALIAN REGULATIONS \ LIGENCES TO BE ISSUED CANBERRA, Nov. 26 Regulations gazetted to-day provide :hnt in future the business of banking •an be carried on only by the holders >f Commonwealth licences. The regulations, which were foreshadowed in the Budget speech of the I'reasiirer, Mr. Chifley, provide thit • ■vithin three weeks existing trading janks shall be granted licences which ■an be withdrawn only on the recommendation of a .Judge of the High ! I'ourt, after inquiry. Important provisions 1 in the regulations ire: - Private banks can make advances only_ in iccordance with Commonwealth Bank policy. , iihl can subscribe to loans and purchase , securities only with the consent of the Comiiotnvcalfh Bank. The Commonwealth Bank, following general principles approved by the Treasurer, is to teterminp what part of a private bank's surplus funds available for investment are o be deposited in a special account with the , Commonwealth Bank. Interest on the balance in the special iccount is to be paid by the Commonwealth Bank at a rate riot, above a maximum fixed >y the Treasurer, and will be designed to '.nsnre that a bank's profits shall not exceed the average of its profits for the three years jnded August 31. 1939. Private banks' balance-sheets and profit Hid loss accounts are to be published in_ a form specified by the Treasurer, who, with the Commonwealth Bank, is to be furnished with such statements of private banks' business as are required, but not with details of individual customers" accounts. The Auditor-General is empowered to inspect periodically, or as directed by the Treasurer, the books, accounts and transactions of the private banks, and report to the Commonwealth Bank and the Treasurer. In his statement Mr. Curtin said that the regulations were planned primarily to achieve two purposes:— "First, they ensure that that investment and loan policy of the banks should accord with the general principle laid down to Kovcru civil investment, thus closing a major gap hitherto existing. "Secondlv, they are designed to prevent the war financial policy of the Government increasing the profits of the private banks and providing the basis for an unsound expansion of credit."