[quote=obiero]Governor Njuguna Ndungu speaks on the negative effects of the rate cap http://www.businessdaily...35034-wlaj53/index.html[/quote]
This was a fake governor. I even doubt his professor title. He is very corrupt and was corrupted more by the banks, that is why he is pro rate cap.

Tano tena? I told you that we will be finished http://www.businessdaily...212-124shyuz/index.html[/quote]

Economy continues to bleed...Sometimes we are aloof on other peoples plight (eg job losses)...until that very plight visits our door steps.

What the professor said is not true and because of this I had to add pointers to show his incompetency in his opinion on the rate cap.The banks have been taking advantage of vulnerable borrowers. Let those banks that are not willing to innovate continue suffering. Other banks are still lending to their customers

Source of the truth is also key. How sure are we that Njuguna has not been paid by banksters to make appropriate noise. Integrity is key. He should also elucidate on the positive side of rate control if giving a balanced opinion. Newspapers may also be on banksters payroll to report all negative economic effects as being due to rate control. Why dont they also talk of corruption and billions wasted on govt largesse.

Haki ya Mungu..That's true

Established businesses with ability to pay?

Once,those big businesses with ability to pay were small start ups.

Going by your reasoning, we wouldn't be having any big business now if the same had befallen them then.

There are a few positives about rates cap.

But the negatives are countless.

Three steps forward, five steps backwards. Are we going or coming? Aren't we better sitting?

i think those who say that people lost plots and other securities due to banks increasing rates...forget (1) the loan arrangement (including the right to vary interest rate) is a willing seller willing buyer arrangement (2) if the repossessions are unfair the courts are available. As for the retrenchments they are neither willing buyer willing seller and there is no recourse to courts.

Yes, he was fake and very corrupt, instead of regulating the banking industry, he more or less focused on selling banking licenses and CBK approvals of dodgy accounts.

Mpesa was more of his being at the right place at the right time, and surprisingly the banking sector was against it and still is so most likely, Safaricom must have had to part with something to get his support.

Now what annoys me mostly about his statement and makes me question his credentials is the information he is witholding when he gives opinions like the one above.

Lets analyze how banking is done in Kenya;

You apply for a loan, if you are employed, you qualify based on salary. If self employed, you give them security which is charged against the amount advanced.

In both cases, there is no pricing of risk whatsoever, that's why banks lend every customer at base rate plus whichever margin they want. Therefore 2 applicants with similar income more often than not get same interest rate, offcourse a rouge applicant will default and leave the bank with fake titles etc.

Now lets look at how banks lend in the UK;

When one borrows, the interest rate they charge you is based on many factors; including your borrowing history, employment history, age, whether you own property, your spending patterns etc. Banks use all this to determine not only the rate they will give you but also the amount. Now this is proper risk pricing. Infact they just need to feed this information into an algorithm and it auto-generates the rate and amount.

Therefore, no 2 applicants with similar income profiles will be judged as same.

Now I expect the professor to know this and so when speaking, he should give a balanced opinion on where banks should be headed. If he supports uncapping of rates, it should be only if banks are also willing to actually price risk for every individual.

He has not done this, because most likely, some banker asked him to write an article about the impact of rate caps so as to influence policy with a view to removing the caps.

Let the rate cap stay until the banks are ready to actually innovate, for now, their petulance is leaving alot of business out there. I am sure some smart banker will mop it up soon.

You have summarized it perfectly.

Fuel shortages in Mpeketoni...
http://www.the-star.co.k...amu-businesses_c1589970