The small Banks attract deposits by offering
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unduly high rates of interest on current accounts and
deposits as compared with the maximum rates offered in this
respect by the larger and conservative Banks and we
recommend that the High Commissioner should have power under
the Banking Ordinance to fix maximum rates of interest which
may be granted by Banks on current and deposit accounts,
should the situation so demand.
51. During the course of our discussions the question was raised of the right of Banks to acquire, hold and dispose of land for the legitimate purpose of their business.
It was pointed out that certain of the larger Banks hold a
certificate signed by the High Commissioner under Section 15(1) of the Companies Ordinance for the holding of
land and that other large Banks have no such certificate.
It was also recognised that in certain cases land can come
into the hands of Banks in the course of their bona fide
business in a manner other than by foreclosure of a
mortgage. Moreover under the existing Law if land is
acquired by a Bank on foreclosure of a mortgage, the debtor
is completely discharged from his debt when the land is
acquired by the Bank regardless of whether the proceeds
from disposal of the property completely liquidated the
outstanding amount of the debt. It was represented that
in the case of a commercial Bank, as distinct from a credit
Bank, the property mortgaged might only form part of the
security for a loan and that it seemed unjust that a
reputable Bank should be placed in a worse position than a
private individual in this respect. Although we consider
it generally undesirable that Banks should be given the
right to hold land in perpetuity, we feel that provision
should be made in the Banking Ordinance to rectify the
present anomalous situation.
52.