Trading bank advances and discounts at the end of June 1963 amounted to £196.2 million, of which only £6.9 million, or 3.5 per cent, were discounts. Advances undoubtedly play an important role in the New Zealand economy. In contrast to the position in some countries trading banks in New Zealand make some relatively long-term advances–a practice which stems from their willingness in the earlier development of New Zealand to lend for capital purposes because other alternative sources of finance were not then established. The overdraft system means that customers do not pay interest on the total limits granted but only on the amount actually used. In addition to interest, bank customers also pay an “overdraft service fee” which is an annual charge levied on the highest limit or advance recorded during the 12 months ending 31 October. The minimum fee is £1 for limits up to 100; it then rises in steps to a maximum of £50 for limits over 50,000. The fee was introduced towards the end of 1961 because of the steady rise in the banks' costs in administering overdrawn accounts. It is doubtful if the fee has had any effect on the demand for bank credit or is a factor in persuading customers to confine limits to an absolute minimum.