Demise of deposit rules gets thumbs up

HONG Kong bankers and analysts have individually welcomed a recommendation by the Government to scrap the rules governing interest rates on time deposits.

While it caused little surprise, the formal decision by the Government to recommend the abolition, which has yet to be made officially public, was seen as a useful middle way between the pressure points being exerted by the Consumer Council, the banking regulators and banks themselves.

The Government's move to recommend the scrapping, made recently, is now to go before the Executive Council and will later be debated by the Legislative Council.

Bankers and analysts believe the partial abolition of the present rules will have negligible impact on the banks.

Bankers admitted that abolishing the rates on time deposit accounts, which constitute less than five per cent of the total time deposit, would hardly cause any ripples in the banking sector.

But they applauded the decision as a useful compromise.