FOR PRESS lctl
. M A6' 9' 25 1966
RURAL CREDIT
Statement by the Prime Minister, Mr. Harold Holt
The Prime Minister announced tonight that as
foreshadowed in his statement to the House of Representatives
on 8th March he, the Minister for Trade and Industry and the
Treasurer heid discussions today with the General Managers of
the major trading banks and the Governor of the Reserve Bank on
proposals for new and extended farm loan facilities.
The main proposals put forward by the Government
were That a new system of Farm Loan Funds should be
established for the financing of farm development.
There would be an initial transfer of $ 50 million
to these Funds, part from Statutory Reserve
Deposits of the trading banks with the Reserve Bank
and part from the resources of the trading banks
as uider the existing Term Loan scheme. The
purposesof the Farm Loan Funds would be to provide
loans on longer terms than are now available under
the Term Loan Scheme for development of both new and
existing rural properties and loans for drought
rehabilitation and mitigation measures and the
gcneral enhancement of farm productivity;
That the existint Term Loan Funds would be increased
by a transfer oT 20 million part from the Statutory
Reserve Deposits and part from trading bank funds.
bIet mwaadse enfrvoims agtehde set haFtu ndrsu raoln tlhoea nss awmeo ulbda sicso ntaisnue to
previously, for periods generally of three
to eight years and that over a period, much the
same proportion of the term Loan Funds would be
used or rural purposes as hitherto;
That trading banks lending on overdraft to rural
borrowers would not be di ed on account of the
new arrangements which would thus represent a net
addition To the finance available for rural purposes;
That releases from the Statutory Reserve Deposits of
the trading banks for the above purposes should be
without prejudice to the normal administration of
the S. R. D. system from time to time for liquidity
purposes. It was proposed that the rates of interest on loans
from the new Farm Loan Funds would maintain the preference
already extended to primary producers and would fall within the
range of rates currently charged to primary producers on
overdraft loans. Representatives of the trading banks expressed
themselves as being generally in full agreement with these
proposals. Further discussion on details will, however be
held between the Reserve Bank and the trading banks. It is
expected that announcement of full details of the new arrangements
as agreed will be made at an early date. ./ 2
2
Mr. Holt added that he regarded the outcome as
a very successful result and entirely in keeping with the
objectives he had announced in the H-buse on this matter as
representing Government policy. Members of the Government
are very appreciative of the helpful _ and constructive
contribution representatives of the banks made to the
discussion.
CANBERRA, 17th March, 1966