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WEDNESDAY, APRIL 29, 1981
SOME OF THESE FINANCE COMPANIES+ WOULD WITHDRAW FROM THE DEPOSIT-TAKING BUSINESS. THE CASE FOR WITHDRAWAL MAY BE STRENGTHENED FOR SOME OF THEM IF OTHER MEASURES, INCLUDING AN INCREASE IN THE MINIMUM PAID-UP SHARE CAPITAL, AND THE IMPOSITION OF TIGHTER PRUDENTIAL CONTROLS, PROPOSED IN THE DEPOSIT-TAK ING COMPANIES (AMENDMENT) (NO. 3) BILL, TO BE PUBLISHED IN THE OFFICIAL GAZETTE THIS COMING FRIDAY, ARE IMPLEMENTED.
FOR THOSE COMPANIES WHICH CHOSE TO STAY ON THE REGISTER, AND FOR OTHER COMPANIES WHICH APPLIED FOR REVOCATION OF THE IR REGISTRATION, CAREFUL TRANSITIONAL ARRANGEMENTS WOULD BE NEEDED.
THE TRANSITIONAL ARRANGEMENTS ENVISAGED HAVE TWO OBJECTIVES. THE FIRST IS TO ENSURE THAT THOSE DEPOSIT-TAKING COMPANIES WHICH ARE NOT GOING TO APPLY FOR, LET ALONE ACHIEVE, LICENSED STATUS HAVE A REASONABLE PERIOD OF TIME IN WHICH TO RUN DOWN THE IR SHORT-TERM DEPOSITS.
THE SECOND OBJECTIVE IS TO ALLOW THOSE COMPANIES WHICH CHOOSE TO APPLY FOR LICENSED STATUS TO CONTINUE TO DEVELOP THEIR BUSINESS DURING THE PERIOD IN WHICH THE IR APPLICATIONS ARE BEING CONSIDERED AND DETERMINED.
SIR PHILIP SAID IT IS PROPOSED THAT A DEPOSIT-TAKING COMPANY, WHICH HAS NOT BEEN GRANTED LICENSED STATUS BY THE END OF 12 MONTHS FROM A NOMINATED DATE, MUST HAVE REDUCED THE AMOUNT OF SHORT-TERM DEPOSITS IT HOLDS TO 50 PER CENT OF THE AMOUNT WHICH IT HELD ON THE "OMINATED DATE.
BY THE END OF A FURTHER 12 MONTHS THAT IS, WITH EFFECT FROM 24 MONTHS FROM THE NOMINATED DATE - A REGISTERED DEPOSIT- TAKING COMPANY, COULD NOT HOLD ON ITS BOOKS ANY DEPOSITS WITH AN ORIGINAL TERM TO MATURITY PERIOD OF LESS THAN THREE MONTHS, AND FROM THAT DATE IT COULD NOT ACCEPT ANY MORE SUCH DEPOSITS.
A DEPOSIT-TAKING COMPANY WHICH WAS GRANTED A LICENCE WOULD, AS FROM THE DATE OF BEING GRANTED SUCH A LICENCE, BE RESTRICTED TO TAKING DEPOSITS OF AT LEAST $500 000: ALL ITS SMALLER DEPOSITS MATURING AFTER THAT DATE WOULD HAVE TO BE REPAID ON MATURITY OR,
IF AT CALL, AFTER A REASONABLE PERIOD.
SIR PHILIP SAID THESE TRANSITIONAL ARRANGEMENTS WOULD HAVE THE EFFECT OF PLACING A REDUCING ABSOLUTE CEILING ON THE TOTAL OF SHORT-TERM DEPOSITS HELD BY DEPOSIT-TAKING COMPANIES WHILE, AT THE SAME TIME, NOT CAUSING APPLICANTS FOR LICENSED STATUS TO TURN AWAY NEW BUSINESS OVER THE PERIOD WHEN APPLICATIONS WERE BEING CONSIDERED.
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DEPOSIT-TAKING COMPANIES WHICH ARE REGISTERED AFTER THE NOMINATED DATE WOULD NOT BE ALLOWED TO TAKE OR TO HOLD ANY DEPOSITS WITH AN ORIGINAL TERM TO MATURITY OF LESS THAN THREE MONTHS. IF AFTER REGISTRATION, THEY APPLY FOR LICENSED STATUS THEY WOULD ONLY BE PERMITTED TO ACCEPT SHORT-TERM DEPOSITS (OF $500 030 OR MORE) ONLY FROM THE DATE THAT SUCH STATUS IS GRANTED.
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