Banking Sector Update
There are likely to be changes in banking policy going forward, driven by the outcome of the Australian Banking Inquiry.
The Banks will be more tightly regulated and the Reserve Bank will require them to hold more capital in reserves to limit over-exposure – increasing from an average of 10% up to 16% over the next five years.
They will also need larger reserves for agriculture, horticulture and commercial than for housing. Banks will be looking at their exposure to certain sectors and there could be some readjustment.
You can read more here* about why these changes are taking place.
What does this mean for you?
If you are wanting to go outside your normal banking requirements for greater seasonal finance, purchase of additional land or stock or licence for gold kiwifruit you may find it harder.
- Keeping a close watch on your spending and overdraft limits will be essential.
- Keeping to budgets will become more important in this environment.
- Make sure you allow for what is coming up over the next few years, so you are not left short.
- Don’t forget to include GST and Provisional Tax.
- If you don’t have and keep to a budget now we strongly suggest you do.
A little bit of preparation now could save stress in the future. Most of our clients are now on Xero, so setting up a budget is much easier than starting from scratch.
If you need help setting up a budget, please feel free to contact Angelina, who is our in-house Xero expert.
*link credit: Milestone Financial