EXPLANATORY STATEMENT
STATUTORY RULES 1987 NO 52
ISSUED BY THE 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 for carrying out or giving effect to the Act.
Section 37 of the Act provides that Regulations made under the Act shall include provisions for certain matters, including the investment of the funds of savings banks.
Sub-regulation 5(4) of the Banking (Savings Banks) Regulations formerly provided that a saving bank must at all times maintain an amount which is not less than 15 per cent of the amount on deposit in Australia with the savings bank in the following assets:
• deposits with the Reserve Bank;
• Treasury Notes;
• other securities issued by the Commonwealth;
• loans to authorised dealers in the short term money market secured by securities issued by the Commonwealth; and
• cash on hand in Australia.
The Government has decided that this ‘reserve asset ratio’ should be reduced from 15 to 13 per cent in order to provide savings banks with added flexibility in the investment of assets, including in the form of lending for housing. The change brings the reserve asset requirements of trading and savings banks closer into line. The Government has also decided that in the longer term the reserve asset ratio should be removed from the Banking (Savings Banks) Regulations and become part of the prudential arrangements administered by the Reserve Bank. This will be achieved through a further amendment to the Banking (Savings Banks) Regulations at a later date.
Detail of the amending Regulation is as follows.
The Regulation has omitted the existing sub-regulation 5(4) and substituted a new sub regulation. The essence of the change is that the figure of 15 per cent as the reserve asset ratio has been reduced to 13 per cent.