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Law Capping interest rates
Rank: Veteran Joined: 8/10/2014 Posts: 969 Location: Kenya
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Obi 1 Kanobi wrote:chemirocha wrote:streetwise wrote:Here we are talking of persons who have died due to distress from banks. A bad law is better than the current situation. We will amend the law along the way as we experience these bad things people are talking about. I am sure those who said the constitution was bad can tell us about lessons learned So how about being denied a loan because you don't fit the banks' risk profile? This populist garbage doesn't solve the issues with accessing credit. I don't understand your comment. many people are denied loans everyday because they don't qualify? Ama what did you mean. We are not suggesting that banks should lend money to every Wanjiku, Otieno & Kipchumba, what we are sayng is that they should not exploit the borrower just because they know the borrower has no other choices. By the way the price of money is inelastic (meaning people will borrow even at 1000%) and thats what banks are taking advantage of. Demand and supply....some developed countries have really low interest rates because they have so much money than they actually need to lend out. Here in Kenya, the money available isnt enough. It will be given to the highest bidder.
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Rank: Elder Joined: 12/4/2009 Posts: 10,678 Location: NAIROBI
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If government owned banks such as Consolidated bank,National Bank,development bank,Post Bank can't give cheap rates then we are doomed. Gava should have propped up ICDC and made it a formidable force in giving out cheap loans to industries for expansion instead of wasting money on NYS. That would have heard a big effect in the economy. ICDC can then be our own Development Bank of South Africa or China development Bank which do a similar role Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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Ericsson wrote:If government owned banks such as Consolidated bank,National Bank,development bank,Post Bank can't give cheap rates then we are doomed.
Gava should have propped up ICDC and made it a formidable force in giving out cheap loans to industries for expansion instead of wasting money on NYS.
That would have heard a big effect in the economy.
ICDC can then be our own Development Bank of South Africa or China development Bank which do a similar role Spoken like 10 elders plus their chief. Life is short. Live passionately.
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Rank: Veteran Joined: 6/23/2011 Posts: 1,740 Location: Nairobi
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You simply cant see development rates in the two digit space with the interest rates we have.
Sanity must be rained in.
Like I said earlier people have been made poor and other died due to this stress.
I better be denied a loan by the bank than have the loan and it causes my demise.
Choices have consequences and here we know low interest rates means no loan to the poor, that fine I am ready to live with it.
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Rank: Veteran Joined: 12/4/2009 Posts: 1,982 Location: matano manne
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@Streetwise, well said. Loan si dawa. On the other hand the poor depositors get more for their savings.
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Rank: Member Joined: 2/7/2014 Posts: 155
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sparkly wrote:Ericsson wrote:If government owned banks such as Consolidated bank,National Bank,development bank,Post Bank can't give cheap rates then we are doomed.
Gava should have propped up ICDC and made it a formidable force in giving out cheap loans to industries for expansion instead of wasting money on NYS.
That would have heard a big effect in the economy.
ICDC can then be our own Development Bank of South Africa or China development Bank which do a similar role Spoken like 10 elders plus their chief. How i wish government people or even people in management in various institution would just have the interest of country and institutions for just one month and make decisions that would benefit all. Having the priviledge of listening to people in management talk at times leaves me wondering about the calibre of our leaders.Na vile ata hapa wazua some advise is for free....
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Rank: Veteran Joined: 12/4/2009 Posts: 1,982 Location: matano manne
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@Streetwise, well said. Loan si dawa. On the other hand the poor depositors get more for their savings.
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Rank: Elder Joined: 3/19/2010 Posts: 3,504 Location: Uganda
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Ericsson wrote:If government owned banks such as Consolidated bank,National Bank,development bank,Post Bank can't give cheap rates then we are doomed.
Gava should have propped up ICDC and made it a formidable force in giving out cheap loans to industries for expansion instead of wasting money on NYS.
That would have heard a big effect in the economy.
ICDC can then be our ow Development Bank of South Africa or China development Bank which do a similar role Which government? , ref nbk npl. The mps veto the bill if uhuru declines to sign. punda amecheka
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Rank: Elder Joined: 3/18/2011 Posts: 12,069 Location: Kianjokoma
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NJOMO ON CITIZEN: We cannot trust banks with their promises of coming up with measures to control the rate. They have promised to do so in the last 2 attempts to legislate rates
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Rank: Elder Joined: 6/23/2009 Posts: 13,501 Location: nairobi
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Lolest! wrote:NJOMO ON CITIZEN: We cannot trust banks with their promises of coming up with measures to control the rate. They have promised to do so in the last 2 attempts to legislate rates "KBRR is not working, MOUs are never respected in Kenya.. Banks refer to 'friendly' rates.. How friendly is 26%".. That guy was sharp
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: New-farer Joined: 7/12/2016 Posts: 39 Location: Nairobi
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I remember when ERC introduced the formula for determining the price of fuel, from the way the oil companies were talking it was like Armageddon had arrived. So far apart from sporadic shortages around 15th of the month when the prices are expected to go up, all is calm.
In a belated rush at self regulation, banks are suddenly falling over themselves sign a 'non legally binding' MOU to reduce rates, indicating that there was always room to reduce rates but banks were more driven by the pursuit of super normal profits as the expense of the economy. Lets have a taste of these controls.
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Rank: Elder Joined: 7/21/2010 Posts: 6,183 Location: nairobi
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Lolest! wrote:NJOMO ON CITIZEN: We cannot trust banks with their promises of coming up with measures to control the rate. They have promised to do so in the last 2 attempts to legislate rates For how long can the bill stay at the parking bay? "Don't let the fear of losing be greater than the excitement of winning."
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Rank: Member Joined: 10/23/2007 Posts: 604
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May Uhuru sign this thing ASAP then we can see how many Kenyans who currently qualify for loans are going to be denied the same.
As Isaac Ruto says, "msituletee upuzz hapa". Banks will now style up.
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Rank: Elder Joined: 7/21/2010 Posts: 6,183 Location: nairobi
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Coolbull wrote:May Uhuru sign this thing ASAP then we can see how many Kenyans who currently qualify for loans are going to be denied the same.
As Isaac Ruto says, "msituletee upuzz hapa". Banks will now style up.
banks have panicked and come with m.o.u's "Don't let the fear of losing be greater than the excitement of winning."
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Rank: Elder Joined: 12/25/2014 Posts: 2,300 Location: kenya
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mlennyma wrote:Coolbull wrote:May Uhuru sign this thing ASAP then we can see how many Kenyans who currently qualify for loans are going to be denied the same.
As Isaac Ruto says, "msituletee upuzz hapa". Banks will now style up.
banks have panicked and come with m.o.u's This year it will be tough on us in terms of dividends ,also banks will take a fair share of shaving.feeling this might trigger deep bear run
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Rank: Member Joined: 8/19/2015 Posts: 125
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Its very unfortunate coz even the president has not seen the Bill himself.....it might even take longer for National Assemble Speaker to forward the same. http://www.standardmedia...l-capping-lending-rates
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Rank: Veteran Joined: 4/4/2007 Posts: 1,162
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What is the downside of the Govt capping interest rates?
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Rank: Elder Joined: 12/25/2014 Posts: 2,300 Location: kenya
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majimaji wrote:
What is the downside of the Govt capping interest rates?
Banks will politely be reluctant to loan to common mwananchi (micro institutions)because risk might be high to be compensated by the suggested capped interest return. So banks will be inclined to loan to govt because the risk is very very minimal even if the rate is low. This will lead to micro institution that depends on loans from banks being starved leading to slower economic growth,slower hiring in that sector and leads to ripple effect towards other sectors .
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Rank: Veteran Joined: 8/10/2014 Posts: 969 Location: Kenya
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enyands wrote:majimaji wrote:
What is the downside of the Govt capping interest rates?
Banks will politely be reluctant to loan to common mwananchi (micro institutions)because risk might be high to be compensated by the suggested capped interest return. So banks will be inclined to loan to govt because the risk is very very minimal even if the rate is low. This will lead to micro institution that depends on loans from banks being starved leading to slower economic growth,slower hiring in that sector and leads to ripple effect towards other sectors . Introduction of new fees into loans or an upward movement in the current fees on loans
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Rank: Elder Joined: 7/26/2007 Posts: 6,514
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majimaji wrote:
What is the downside of the Govt capping interest rates?
Well, probably all loans below the cap limit will move up to the limit. And many high risk loans will be recalled, not worth the effort given the low rate. Business opportunities are like buses,there's always another one coming
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