XN000022-1981-04-10 — Page 7

FRIDAY, APRIL 10, 1981

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WHILE THE CARRYING ON OF BANK ING BUSINESS WOULD BE RESTRICTED TO LICENSED BANKS, DEPOSITS DUE IN LESS THAN THREE MONTHS MAY ALSO BE RECEIVED BY THE SECOND, NEW CATEGORY OF DEPOS IT-TAK ING INSTITUTION TO BE KNOWN AS LICENSED DEPOSIT-TAKING COMPANIES.

THERE WOULD BE NO LIMITATION TO THE TERM OF DEPOSITS SUCH COMPANIES COULD TAKE, BUT THE MINIMUM SIZE OF INITIAL DEPOSIT WOULD BE SET AT $500 000. THESE COMPANIES WOULD NOT OPERATE CURRENT ACCOUNTS.

TO OBTAIN A LICENCE, A COMPANY WOULD HAVE TO BE REGISTERED AS A DEPOSIT-TAKING COMPANY AND HAVE PAID-UP SHARE CAPITAL OF $100 MILLION OR MORE.

LICENCES WOULD BE GRANTED BY THE FINANCIAL SECRETARY, AND UNSUCCESSFUL APPLICANTS, AND THOSE WHO HAVE THE IR LICENCES REVOKED, WOULD HAVE THE RIGHT OF APPEAL TO THE GOVERNOR IN COUNCIL.

THE THIRD CATEGORY OF INSTITUTION WOULD BE REGISTERED DEPOS IT-TAKING COMPANIES, THAT IS, ANY WHICH ARE NOT LICENSED. THEY WOULD CARRY OUT THE EXISTING FUNCTIONS OF DEPOSIT-TAKING COMPANIES, EXCEPT THAT THEY WOULD NO LONGER BE PERMITTED TO TAKE DEPOSITS WITH AN ORIGINAL TERM OF MATURITY OF LESS THAN THREE MONTHS.

THE MINIMUM INITIAL SIZE OF DEPOSIT WHICH COULD BE TAKEN BY THESE DEPOS IT-TAK ING COMPANIES WOULD REMAIN AT $50 000.

CERTAIN TRANSITIONAL ARRANGEMENTS ARE PROPOSED TO ENSURE THAT COMPANIES WHICH ARE NOT GOING TO ACHIEVE LICENSED STATUS HAVE A REASONABLE PERIOD OF TIME IN WHICH TO RUN DOWN THEIR SHORT-TERM DEPOSITS. THE ARRANGEMENTS WOULD ALSO ALLOW COMPANIES WHICH APPEAR TO QUALIFY FOR THE STATUS OF A LICENSED DEPOSIT-TAKING COMPANY TO CONTINUE TO DEVELOP THEIR BUSINESS DURING THE PERIOD IN WHICH THE IR APPLICATIONS ARE BEING CONSIDERED.

THE TWO BILLS STATE THAT THE AMENDING LEGISLATION WILL COME INTO OPERATION ON A DAY TO BE APPOINTED BY THE GOVERNOR. IT IS FURTHER PROPOSED THAT THE PROVISIONS OF THE NEW ORDINANCES SHOULD COME INTO EFFECT ON TWO DATES, 12 AND 24 MONTHS FROM THE OPERATIVE DATE.

BY THE END OF THE FIRST 12-MONTH PERIOD, ANY DEPOSIT- TAK ING COMPANY WHICH WAS REGISTERED ON THE OPERATIVE DATE. AND HAD NOT BEEN GRANTED LICENSED STATUS, WOULD HAVE TO HAVE REDUCED THE AMOUNT OF ITS SHORT-TERM DEPOSITS TO 50 PER CENT OF THE AMOUNT IT HELD ON THE OPERATIVE DATE.

BY THE END OF THE SECOND 12-MONTH PERIOD, A REGISTERED DEPOS IT-TAK ING COMPANY WOULD NOT BE PERMITTED TO HOLD ON ITS BOOKS ANY DEPOSITS WITH AN ORIGINAL MATURITY PERIOD OF LESS THAN THREE MONTHS, AND FROM THAT DATE IT WOULD BE PROHIBITED FROM ACCEPTING ANY MORE SUCH DEPOSITS.

THE FINANCIAL SECRETARY AND THE COMMISSIONER OF DEPOSIT- TAKING COMPANIES WOULD BE EMPOWERED TO REVOKE THE LICENCE AND REGISTRATION RESPECTIVELY OF A DEPOSIT-TAKING COMPANY AT ITS OWN REQUEST IF THEY WERE SATISFIED THAT THE INTERESTS OF ITS DEPOSITORS WERE ADEQUATELY SAFEGUARDED.

ADDITIONALLY, THE