Metasploit wrote:MaichBlack wrote:watesh wrote:Lending rates getting capped at 4% above CBK benchmark....so what happens to Equitel loans? Its way above that 4% limit and much harder to impose so many fees on it
President Uhuru is not going to sign that bill!!!
Any finance/economics guy will tell it would be a tragedy to individual loan seekers and SMEs.
Interest rates among other things depend on the risk profile of the client. If the rate is capped, the banks would focus on the least risky customers first - the government and blue chip companies. SMEs and individuals would follow if there is money left.
And why would I want to lend to 10,000 entities Kshs. 100,000/= each while there is a single entity (with a better risk profile) that is willing to take the entire billion???
When he was the finance minister in 2011,he objected the Donde bill.
CS treasury,a friend to the president of Kenya and CBK Governor are opposed to the bill
Glad the president has found it wise to consult on the whole thing before he makes the decision. Clearly the bill mover ought to have done so before.
At least they should have analysed why the bill have never passed thru for the prior attempts.
Then they analyse what it means to cap rates in a liberal market.
Check what efforts has the regulator brought or is bringing into place to reduce the borrowing cost.
Review (with an objective) the MPC effectiveness in the transmission of the rates to the borrower.
Economic experts have clearly said such a bill is detrimental to the growth of the economy as well as possible reversion of gains made the industry in the free economy.
Fact based and impact based analysis should precede/guide such kind of bills in the house.