I move: "That the Bill be now read a Second Time."
The primary purpose of the Bill is to increase the authorised share capital and borrowing limits of the Agricultural Credit Corporation. The Agricultural Credit Act, 1965, authorised share capital of £6 million for the Corporation and fixed at £20 million the borrowing powers of the Corporation. It was expected at the time that these new limits would be adequate to cover the Corporation's requirements for capital to finance its activities for a period of three years. The share capital has now been fully subscribed by the State and total borrowing by the Corporation amounts to approximately £15 million. The Bill proposes to increase the authorised share capital limit to £10 million (section 2) and to extend the borrowing limit to £25 million (section 3). It is expected that the proposed new limits will suffice for at least five years ahead. As the Bill authorises an increase in the Corporation's borrowing powers it is desirable to increase to a corresponding extent the authority of the Minister for Finance to guarantee the Corporation's borrowings. This is the purpose of section 4.
The Bill also has a number of other provisions which are intended to facilitate the Agricultural Credit Corporation in its day-to-day administration. As the volume of its business grows the Corporation is finding it increasingly difficult to have the annual accounts prepared, audited and furnished to the Minister for Finance for presentation to the Houses of the Oireachtas within 90 days after the end of the accounting year as required by present legislation. It is proposed in section 5 to follow modern practice generally in this respect in relation to State-sponsored bodies by removing the specific time limit of 90 days. The Corporation will still be obliged to have the accounts ready as early as possible.
Under present legislation requests to a county registrar by the commercial banks and the ACC for information from the register of chattel mortgages must be made under seal. This procedure has at times proved to be a source of delay for the Corporation and it is proposed in section 6 of the Bill that in future requisitions to a county registrar may be made under the hand of a solicitor or law agent of the Corporation or bank. The county registrar will, of course, continue to be the only person with direct access to the register of chattel mortgages. I understand that the commercial banks do not register chattel mortgages to any extent.
Section 7 is a consequential provision to empower the ACC to make the necessary alterations in its Memorandum and Articles of Association arising out of the changes being made in the Bill. Normally the ACC may not alter its Memorandum or Articles of Association without the approval of the Minister for Finance.
During its financial year 1967-68 the ACC issued a total of 6,080 loans, including hire purchase advances, to the extent of £4.5 million and approximately 4,000 of those were for amounts of less than £500. The total amount of loans at present outstanding exceeds £20 million. Lending by the Corporation in its current financial year, which ends on 30th April next, will total more than £5 million and it is estimated that the volume of business will rise in the years immediately ahead.
While overall lending by the ACC has fallen off since 1965, due to the general suspension in the autumn of that year of loans for land purchase and the funding of bank debts because of the shortage of capital, there has been a steady increase in loans for directly productive purposes. The number of unsecured loans issued by the Corporation to farmers is rising rapidly and the maximum amount of loan which may be issued under the Corporation's scheme of unsecured loans is now £750. The Budgeted Loan Scheme, which has been in operation since the beginning of 1968, enables farmers to finance their seasonal needs as they arise by means of a book of dated cheques issued by the Corporation; no security is required for loans of up to £1,000 under this scheme. The Corporation now operates a comprehensive range of loan facilities designed to meet the productive needs of agriculture. Business with farming co-operative societies is growing steadily, and outstanding loans to these societies at present well exceed £1½ million. Over 80 per cent of all loan applications received by the Corporation are approved, and the repayments record of borrowers is excellent. Because of the continuing shortage of capital it will be necessary to continue the present restrictions on loans for land purchase and debt funding. Any significant relaxation of these restrictions would give rise to considerable extra expenditure which would have to be financed from Exchequer funds thus adding to the difficulties of financing the public capital programme. However, the Corporation continues to make loans available for the purchase of land to enlarge uneconomic holdings.
An important development in the ACC's activities has been the setting up of area officers in provincial centres. These officers provide a closer link between the ACC and the farmer and they help by their advice to ensure that credit is used to best advantage by the borrower. As the Corporation's business grows, further extensions to the area officer system are envisaged.
In recent years the ACC has raised a considerable amount of capital from the public through the issue of farm credit bonds, introduced in 1962, and the operation of a deposits scheme which was introduced in 1965 and which is at present the Corporation's main source of non-Exchequer borrowings. Both bonds and deposits are guaranteed by the State. The total of outstanding bonds and deposits at present amounts to approximately £6½ million. The Corporation's efforts to finance as much as possible of its lending operations from non-Exchequer sources were hampered considerably during the past year by the general increase in interest rates which resulted in stronger competition from other borrowing institutions for the public's savings. In order to maintain its competitive position the Corporation revised its borrowing rates in January and again in April of this year.
The interest rates on deposits now range up to 7¼ per cent subject to six months notice of withdrawal and the interest rate applicable to the latest series of bonds is 6 per cent with a tax-free capital bonus of 2 per cent where the bonds are held for five years. To offset the extra cost of paying higher borrowing rates the Corporation has found it necessary to increase its lending rates and hire purchase charges. The Corporation now charges interest at the rate of 8½per cent on new loans which compares with the present bank overdraft rate of 9 per cent. However, as a concession to the small farmer, the Corporation has maintained an interest rate of only 6½ per cent on all loans made under its scheme of unsecured loans where the borrower's aggregate indebtedness to the Corporation, including the new loan, does not exceed, £400. Loans in this category constitute approximately one-third of all loans issued by the Corporation to individual farmers and the concession should, therefore, be of significant benefit to the small farmer. The Corporation's hire purchase charges are kept at as low a level as possible in the interest of the farming community.
The primary objective of the ACC is to ensure that the development of Irish agriculture is not impeded by lack of capital. In pursuit of this objective the Corporation aims to be the most convenient and the cheapest possible source of credit for the farmer consistent with its operation as a commercial organisation. It now offers a wide range of loans for farming purposes on favourable terms as to interest and repayment and, in so far as it can, it seeks to ensure that the money borrowed by the farmer is put to the best possible use. The Bill which I now present to the House is intended to enable the good work being carried out by the ACC to be continued and expanded. I confidently recommend the Bill for the approval of the Dáil.