BANK RATE DROP

Taranaki Daily News, 16 April 1932, Page 6

BANK RATE DROP

ASSOCIATED BANKS’ PLAN

DATE OF REDUCTION NOT SET

MINIMUM .OF. SIX RER CENT, DEPOSIT RATES INVOLVED EXPLANATION OF. DELAYS By Telegraph.—Press Association. Wellington, Last Might, The chairman of the Associated Banks stated to-day that the banks propose to make a reduction in the rate of interest bn advances so. as to bring the rate down on an average by half per cent., with a minimum rate of 6 per cent. The 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 an alteration in the bank rates cannot be made. 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 current deposits for a period up to 24 months. Further it will not be for 15 months yet (that is, until July, 1933) that the. full benefit of tlffi previous reduction in fixed deposit rates made on August 1, 1931, will acerue to the banks. Attention is drawn also to the fact that with the minimum advance or overdraft 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 only 1 per cent, in respect of the latter. This, however, is reduced by the incidence of the banks’ income tax of rather more than 8s 9d per cent, per annum on deposits and another 8s 9d per cent, on advances to below 2s 6d per cent, per annum.