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13.
10
Recognising
However, although the time was not right for the
integrated solution to many of the difficulties that had
then been identified, it was felt that it was absolutely
necessary to proceed with certain minimum measures
for the protection of the system. The measures which it
was thought could safely be brought in despite the troubled
times were introduced by the Deposit -taking Companies Ordinance which came into operation on 1st April 1976. One of the
main purposes of the Ordinance was to discover the number of
non-bank deposit-taking institutions in Hong Kong.
that their number had been growing rapidly for a number of
reasons, including as I have already indicated, the inability
of overseas banks to obtain banking licences in Hong Kong,
A system of registration, as opposed to licensing, with very
limited and easy to fulfil criteria, was introduced with the aim
of encouraging existing companies engaged in deposit-taking activities to register. The only prudential controls imposed on
a deposit-taking company at that time were capital-related
limits on loans to individual customers, or to customers.
connected to the company. To protect small depositors
registered companies were not allowed to accept deposits
smaller than $50,000. The Government view being that while
it had an obligation to give what protection it could to small
depositors, it could not accept a similar obligation in respect
of large depositors, who should be capable of either judging
the risk or of obtaining competent advice. So with this major
exception, the emphasis at that time was to obtain information
about the number of deposit-taking companies and the scale of
/their...