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had been granted a licence. The period of consolidation
had obviously strengthened the banking sector substantially and
with growing g.d.p., there was thus increasing pressure for the granting of new licences, and so in 1978 the Government
decided to admit foreign banks which were able to meet a set
of more objective criteria.
9.
However, it would seem with hindsight that these
restrictions on banking licences which had been in force for
over a decade from 1965 to 1978 had side effects which could
not have been appreciated at the time. For, encouraged by
the economic boom which started from 1968 and which was
briefly interrupted in 1974 and 1975 by the oil crisis induced
recession, there was a substantial increase over this period in
the number of finance companies operating in the business of
taking deposits from the public. These finance companies generally
attracted deposits from the public by offering higher rates of interest
than the licensed banks. They ranged from large, well-
capitalised companies, many of them owned by banks, to small
family businesses. Although they have in common that they took
deposits from the public, the nature of their businesses otherwise
varied quite widely from one to another, ranging through
corporate finance, specialised investment financing, under-
writing and other stock market activities, Euro-dollar borrowing
and lending, foreign trade financing, foreign exchange
dealing, property finance, factoring, leasing, hire purchase
finance and money lending. Licensed banks also offered these
/services...