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Wednesday, 12 April 1961

Mr Ward d asked the Treasurer, upon notice -

1.   Is it a fact that the Commonwealth Reserve Bank issued an instruction to the trading banks in January last that, in addition to the repayment to the Reserve Bank of the releases of finance to cover 1960 Christmas trading, they were required to reduce total bank advances by a further £50,000,000 by the end of March, 1961?

2.   If so, will he state whether the calling in of trading bank loans and overdrafts to comply with this direction is selective or whether all industrial and commercial enterprises are being treated similarly, regardless of whether their products or activities are classified as essential?

Mr Harold Holt - The answers to the honorable member's question are as follows: -

1.   No such instruction was issued by the Reserve Bank. However, as foreshadowed in my statement on economic measures in the House on 15th November, 1960, and announced by the Reserve Bank on 25th November, the banks were asked to achieve a considerable reduction in advances outstanding by the end of March, 1961. Some reduction could be expected from normal seasonal influences. Between October, 1960, and February, 1961, the monthly average of major trading bank advances outstanding fell by £62 million.

2.   In carrying out the present advance policy directive banks are required to follow a selective policy on the lines announced by the Reserve Bank on 25th November. I am arranging for the honorable member to be supplied with a copy of the Reserve Bank's announcement.

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