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Tuesday, 16 August 1960

Mr HAROLD HOLT - The recent request by the Reserve Bank of Australia for greater restraint in trading bank lending mentioned that a check over the gene: al range of lending was being sought and that banks had been asked to guard particularly against lending for speculative activities. In accordance with this request, some restraint on new lending to primary producers, including wool-growers, as well as to other prospective borrowers, must be expected. However, the banks are conscious of their traditional role as the major source of finance for the rural industries, and in particular of the need for sympathetic consideration in circumstances in which seasonal conditions are adverse, and there is no reason to expect that normal lending for ru al production will be specially affected. 1 have been informed by the Reserve Bank that new lending io rural industries has been running at high levels, and that some moderation would still leave a rate of new loans by trading banks tor rural pu-poser above that of a year or so ago. I also wish to correct the impression, evident in the question, that an actual reduction of bank overdrafts outstanding is being sought at present. The

Reserve Bank's request was for a reduction in the rate of new lending; that is to say, in the rate at which banks are currently approving new or increased loans.

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