TNAG-1266-FCO40-1615-Economic-policy-in-Hong-Kong-1983 — Page 35

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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...