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Law Capping interest rates
Rank: Veteran Joined: 7/5/2010 Posts: 2,061 Location: Nairobi
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mkeiy wrote:quicksand wrote:mkeiy wrote:quicksand wrote:Ngalaka wrote:Kusadikika wrote:Setting interest rates and assessing risk is very hard without data. In the a place like the US there is plenty of data to work with because of the reporting system using the social Security number that tracks everything.
You provide the number every time you rent a house, get utility connection like power and water, buy insurance, buy a car, get a credit card, borrow a loan etc.
There is therefore plenty of information to work with even before you have borrowed any money because if you have failed to pay your electricity or water bill or even rent it shows up.
This system works to provide a lot of information for businesses etc but on the flip side you feel like you are constantly being monitored. Even information like how frequently you use the ATM and what amounts you withdraw is known and probably being used to give a profile of who you are. Of course we are dealing with a bunch of theorists. This is Kenya - for crying out loud. Got to appreciate where we are at present - realism. Once upon a time,..the likes of Barclays and Stanchart required a minimum of 20,000 shillings to keep an account open. This was the late 90's, early 2000s. If you couldn't afford to park an expensive 20k you were not worth their time. Large swathes of Kenya were not worth their time as they started closing branches,..even in big towns like Nyahururu. The bitch slap that came still stings even today... There is an eerily similar parallel here. There is information to work with to assess risk even at present, starting by a bank's own books, its own lending history, its customers' borrowing history. We have a credit reference bureau, don't we? Who is going to be the first bank executive to stop moaning, get off his fat ass and exploit the new opportunities that this rate regime has brought? Who will deliver the bitch slap v2.0? Lets wait and see. @quicksand. Using few words,if you may, highlight these NEW opportunities that rate cap has brought, which NEVER existed before? I already have, in the text I posted, but happy to repeat it. The premise is that there is no credit history information. That is not true. A bank surely has credit information of its past borrowers? Start with those. Introduce new procedures, like for instance quick audits of business operations to ascertain the health of the borrowers. Have salaries employees process pay through your accounts..etc etc Yes, it will introduce overheads BUT it is doing something. Banks could share info. Other companies do, for instance telcos have cross billing agreements, network resource sharing agreements, newspapers have printing agreements....it reduces risk for everyone....the rate regime is supposed to spur innovation and cooperation of this nature, if only banks weren't such prima donnas. Govt borrowing is perhaps to blame. What is the opportunity? Capitalizing on the fear of other banks. A sacco I know is buying and consolidating banks loans for it members. That is a positive sign. That is confidence in its members ability to pay. Saccos even loan out money merely on a written guarantee from other members and members issue guarantees many times over their holdings - no security/asset holds - and yet you don't get hissy fits from Saccos. There are no meltdowns in Saccos as a sector. I hope it sticks, I really do. @quicksand. I said few words. Didn't bother reading your long post. Awwww no..I am losing sleep cause you didn't read. Goodness me, what to do? I am overcome with grief.
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Rank: Elder Joined: 6/23/2009 Posts: 13,502 Location: nairobi
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Partial reversal of the cap now almost guaranteed with a Uhuru win
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Member Joined: 4/14/2010 Posts: 806 Location: Nairobi
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obiero wrote:Partial reversal of the cap now almost guaranteed with a Uhuru win That will be super for the economy
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Rank: Veteran Joined: 10/29/2008 Posts: 1,566
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obiero wrote:Partial reversal of the cap now almost guaranteed with a Uhuru win Count down begins Isuni yilu yi maa me muyo - ni Mbisuu
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Rank: Elder Joined: 6/23/2009 Posts: 13,502 Location: nairobi
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Ngalaka wrote:obiero wrote:Partial reversal of the cap now almost guaranteed with a Uhuru win Count down begins This financial rally is on steroids
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Member Joined: 4/14/2010 Posts: 806 Location: Nairobi
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obiero wrote:Ngalaka wrote:obiero wrote:Partial reversal of the cap now almost guaranteed with a Uhuru win Count down begins This financial rally is on steroids >Banks will make money >>Investors in Banks stocks will make money >>>Those waiting for banks to loan them at 14% without pricing risk....well...they shall continue waiting  .
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Rank: Veteran Joined: 11/13/2015 Posts: 1,589
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winston wrote:obiero wrote:Ngalaka wrote:obiero wrote:Partial reversal of the cap now almost guaranteed with a Uhuru win Count down begins This financial rally is on steroids >Banks will make money >>Investors in Banks stocks will make money >>>Those waiting for banks to loan them at 14% without pricing risk....well...they shall continue waiting . Even if it's not repealed investors in banking stocks will receive generous dividend payouts. Banks don't need all that capital on their books. KCB and Stanbic have already shown the way
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Rank: Elder Joined: 6/23/2009 Posts: 13,502 Location: nairobi
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wukan wrote:winston wrote:obiero wrote:Ngalaka wrote:obiero wrote:Partial reversal of the cap now almost guaranteed with a Uhuru win Count down begins This financial rally is on steroids >Banks will make money >>Investors in Banks stocks will make money >>>Those waiting for banks to loan them at 14% without pricing risk....well...they shall continue waiting . Even if it's not repealed investors in banking stocks will receive generous dividend payouts. Banks don't need all that capital on their books. KCB and Stanbic have already shown the way Good times ahead for the large banks. Expect more M&A action on the smaller banks
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Elder Joined: 7/23/2008 Posts: 3,017
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obiero wrote:Partial reversal of the cap now almost guaranteed with a Uhuru win Conclusion based on? "The purpose of bureaucracy is to compensate for incompetence and lack of discipline." James Collins
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Rank: Elder Joined: 6/23/2009 Posts: 13,502 Location: nairobi
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Obi 1 Kanobi wrote:obiero wrote:Partial reversal of the cap now almost guaranteed with a Uhuru win Conclusion based on? It's a logical expectation, not conclusion
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Elder Joined: 6/23/2009 Posts: 13,502 Location: nairobi
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Very fake
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Elder Joined: 6/23/2009 Posts: 13,502 Location: nairobi
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Sidian down http://www.businessdaily...57684-h6y6c2z/index.html
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Member Joined: 4/14/2010 Posts: 806 Location: Nairobi
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[quote=obiero]Sidian down http://www.businessdaily...7684-h6y6c2z/index.html[/quote] @obiero...only banks that have interest rate cap proof mechanisms will escape the heat...eg memba with equitel, simba with kcb mpesa loans
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Rank: Veteran Joined: 7/5/2010 Posts: 2,061 Location: Nairobi
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It would be careless of bank chiefs to keep hoping the rate cap will go away and stop adjusting appropriately. It might go away in the near future,....but there is a reason why the cap came into existence. At the very least, it looks good for politicians to thwack banks with a big club -so if it goes away, and banksters don't take some hard lessons from the experience and address real concerns about the cost of credit to Wanjiku, it could come back. And this back and forth in policy isn't good for anyone. Also, the rate cap might not go away.
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Rank: Elder Joined: 7/26/2007 Posts: 6,514
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Even if the rate cap goes away, why will retail credit expand? Most loans are in arrears at 14%, what will happen if banks adjust upwards to 18%? It's the economy, stupid.... Business opportunities are like buses,there's always another one coming
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Rank: Elder Joined: 6/23/2009 Posts: 13,502 Location: nairobi
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KulaRaha wrote:Even if the rate cap goes away, why will retail credit expand? Most loans are in arrears at 14%, what will happen if banks adjust upwards to 18%?
It's the economy, stupid.... Asante @kularaha.. Some people simply don't get it. BBK needs to adjust it's whole model
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Elder Joined: 7/26/2007 Posts: 6,514
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obiero wrote:KulaRaha wrote:Even if the rate cap goes away, why will retail credit expand? Most loans are in arrears at 14%, what will happen if banks adjust upwards to 18%?
It's the economy, stupid.... Asante @kularaha.. Some people simply don't get it. BBK needs to adjust it's whole model Even at 18%, I doubt banks would risk more lending with npls where they are now...its better to get a lower return from GoK paper than chase a defaulter... Business opportunities are like buses,there's always another one coming
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Rank: Elder Joined: 12/4/2009 Posts: 10,679 Location: NAIROBI
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Job stability should be the number one priority.Then all the other things will fall into place like credit expansion Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Veteran Joined: 10/29/2008 Posts: 1,566
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KulaRaha wrote:Even if the rate cap goes away, why will retail credit expand? Most loans are in arrears at 14%, what will happen if banks adjust upwards to 18%?
It's the economy, stupid....  So said Bill Clinton, then he went on to win the election. Isuni yilu yi maa me muyo - ni Mbisuu
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Rank: Veteran Joined: 10/29/2008 Posts: 1,566
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quicksand wrote:It would be careless of bank chiefs to keep hoping the rate cap will go away and stop adjusting appropriately. It might go away in the near future,....but there is a reason why the cap came into existence. At the very least, it looks good for politicians to thwack banks with a big club -so if it goes away, and banksters don't take some hard lessons from the experience and address real concerns about the cost of credit to Wanjiku, it could come back. And this back and forth in policy isn't good for anyone. Also, the rate cap might not go away. Bear one thing in mind 'Organisms dont commit suicide' - knowingly. Sidian Bank couldnt have allowed themselves go into loss territory just to prove a point. Isuni yilu yi maa me muyo - ni Mbisuu
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