EXPLANATORY STATEMENT
STATUTORY RULES 1984 NO 168
ISSUED BY AUTHORITY OF THE TREASURER
BANKING ACT 1959
BANKING (SAVINGS BANKS) REGULATIONS (AMENDMENT)
Section 71 of the Banking Act 1959 (the Act) empowers the Governor-General to make regulations, not inconsistent with the Act, prescribing all matters which by the Act are required or permitted to be prescribed or which are necessary or convenient to be prescribed for carrying out or giving effect to the Act. Section 37 of the Act provides that Regulations made under the Act shall cover, inter alia, the following matters:
• defining the classes of persons from whom savings banks may not accept deposits; and
• defining the classes of persons whom a savings bank may permit to draw cheques on an account maintained with the savings bank.
On 10 April 1984 the Treasurer announced that the Government had decided to amend the Banking (Savings Bank) Regulations (the Regulations), with effect from 1 August 1984, to:
• remove the $100,000 limit on deposits by a trading or profit-making body; and
• allow savings banks to offer cheque facilities on all accounts.
It was decided subsequently that the Regulations should be amended to allow loans to authorised dealers in the short-term money market to count towards the requirement for a savings bank to maintain in investments of specified kinds (liquids and government securities) an amount representing not less than 15 per cent of deposits in Australia of the savings bank. This amendment to the Regulations is also to become effective on 1 August 1984.
The opportunity is being taken to repeal a transitional provision, arising out of amendments made to the Regulations in 1982, which is no longer operative.
The amending Regulations repealsub-regulation 5(3) of the Regulations. Sub-regulation 5(3) is a transitional provision, operative in the period from 31 August 1982 to 30 June 1983, specifying that savings banks hold at least 7.5 per cent of their Australian deposits in deposits with the Reserve Bank and Treasury Notes, and at least 15 per cent in those investments together with cash on hand in Australia and other securities issued by the Commonwealth.
From 1 July 1983 sub-regulation 5(4) has required savings banks to hold at least 15 per cent of their Australian deposits in deposits with the Reserve Bank, cash on hand in Australia, Treasury Notes and other securities issued by the Commonwealth. The proposed amendment to sub-regulation 5(4) provides for loans to authorised dealers in the short-term money market that are secured by Commonwealth Government securities to also count as investments in terms of that 15 per cent requirement.
The proposed Regulations repeal regulation 6A and regulation 7 and substitute a new regulation 7. Regulation 6A provides that savings banks shall not accept deposits exceeding $100,000 from certain companies or other bodies. Regulation 7 restricts savings banks from offering cheque facilities on accounts, other than those of a local authority, company, body, society or club (not including a trading or profit-making body). The new regulation 7 allows savings banks to offer cheque facilities on all accounts.