The Banks and Banking Committee of the Massachusetts House of Representatives will recommend the state legislature kill a proposal requiring universities to put 75 per cent of their deposits in banks in their communities, a source on the committee said yesterday.

The bill, filed by Cambridge State Rep. Michael J. Lombardi and aimed primarily at Harvard and the Massachusetts Institute of Technology, will not be reported out of the committee until later this month, the source, who asked not to be identified, said.

Unless the committee votes again on the measure, it will be sent to the House floor with an unfavorable report, decreasing its chance of passage.

The bill would require Harvard and other universities to spread their deposits among local banks or face the loss of their tax-exempt status.

Opposition

Committee members agreed that the law would discriminate against educational institutions, impair the right to contract and perhaps violate the due process clause of the Constitution, the source said.

Harvard, which switched a large portion of its deposits from Cambridge Trust to the Boston-based New England Merchants National Bank earlier this year, did not testify before the committee, Lewis A. Armistead, assistant vice president for government and community affairs, said yesterday.

Armisteadadded, however, that the law "did not seem to be the type of legislation that is customary."

"The University tries to do business with banks in Cambridge in accordance with the services they offer," Armistead said. "We get different services from different banks," he added.