CO129-555-6 Banking crisis 24-9-1935 - 18-10-1935 — Page 51

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.