RURAL CREDITS SYSTEM

Taranaki Daily News, 15 October 1930, Page 12

RURAL CREDITS SYSTEM

SECURITY FOR ADVANCES. PRUDENT LENDING POLICY. “As is tl;e case wilb lending institutions of a new nature the rejection of unsuitable applications has occasioned some criticism,” says the third annual report of the Rural Intermediate Credit Board. “But it may be stated generally that where the necessary security has existed the loans have been made available promptly a nd on the moat favourable terms. “It is the object of the system to prqvidp Iqgns principally on the security pf farming stock find plant, and the encountered have for the most' part arisen out of proposals put forward fpr the acceptance of other classes 'of seeprity. Ip spitable eases tfip board has accepted collateral of a satisfactory character where therp has beep seeprity for the niajor portion of the loap in th e borrower’s farming sto’pk and implements.” The . total investments of the board increased during the yepr ended August 31, 1930 j from £215,176 to £405,789, an increase pf nearly 100 per cent., after taking into account the substantial rpppymepte. received in tfie pase of nearly every loan. The most marked increase w as in respect of loans to associations, the respective totals being £89,530 and £209,434. Advances to farmers direct showed a substantial increase from £117,987 to £181,841, the majority of the loans being granted on the guarantee of dairy companies. The face value of bills discounted increased from £7265 to £13,882.

Thirty-seven co-operative rural inter? mediate credit associations, 16 of whjch were formed- after June 30, 1929, qi’S in operation, and the formation of sev? eral more is assured. The utilisation of the direct borrowing provisions through the co-operative dairy oompan? ies had the same practical effect as the formation of associations among th® suppliers. Up to the time of the com? pilation of the report 57 companies had concluded arrangements with the board for the acceptance cf their guarantees of loans.

The original loan of £400,000 fron* the Consolidated Fund having been ap? plied to the fullest extent the board will be dependent upon the issue of debentures for funds with which to carry on the future development of its bust? ness.

Tfle report says it cannot be antici? pated that the debenture issues will appeal to the investing'public if the board does not maintain a prudent standard of investment, measuring the security for its individual loan transactions by that which would ho considered satisfactory by the individual investors in the debentures. / ' . . In regard to the board’s decision that as a matter of policy it would be unsafe to lend money on the basis of high valuations pf. ptock of pedjgrpe or stud quality, the report says that to a limited extent the board has agreed to take such stock into account at valuations gomewhat in excp.ss of thpse assigned to grade stock. Limits of £l5 for pedigree dairy cows and bulls and £2 2s for stud sheep have been imposed, with proportionate valuations for ypiiug stock ami provision for the recognition pf exceptional valpe in pedigree bulls and stud rams if covered hy a livestock insurance policy. The board is consider? im? suggestions for the acceptance of higher valuations of pefligrep dairy bulls where the borrower is aiming at progressive improvement of his herd,