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Law Capping interest rates
Rank: Elder Joined: 6/23/2009 Posts: 13,502 Location: nairobi
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KulaRaha wrote:rate cap, no rate cap, no difference, won't increase access to credit either way. That's the whole truth. Note is that retail segment was not affected at all but the SME and corporate are driving the repeal agenda. Not even because of the 14% but the 7% floor
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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Ericsson wrote:KulaRaha wrote:rate cap, no rate cap, no difference, won't increase access to credit either way. But will enable GoK/Rotich access to $1.5bn from IMF They've never used that facility for as long as they've had it... And it's not like it's another loan to spend on useless projects... Waste of time imo Business opportunities are like buses,there's always another one coming
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Rank: Elder Joined: 7/26/2007 Posts: 6,514
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obiero wrote:KulaRaha wrote:rate cap, no rate cap, no difference, won't increase access to credit either way. That's the whole truth. Note is that retail segment was not affected at all but the SME and corporate are driving the repeal agenda. Not even because of the 14% but the 7% floor tbh rate cap saved banks from huge unsecured bad debt portfolios...imagine Kenyans who had borrowed to buy tvs/empty plots and drinks on weekends trying repay in the current economic environment... Business opportunities are like buses,there's always another one coming
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Rank: Elder Joined: 12/4/2009 Posts: 10,678 Location: NAIROBI
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KulaRaha wrote:obiero wrote:KulaRaha wrote:rate cap, no rate cap, no difference, won't increase access to credit either way. That's the whole truth. Note is that retail segment was not affected at all but the SME and corporate are driving the repeal agenda. Not even because of the 14% but the 7% floor tbh rate cap saved banks from huge unsecured bad debt portfolios...imagine Kenyans who had borrowed to buy tvs/empty plots and drinks on weekends trying repay in the current economic environment... Wangelipa tuu. We were there during Kibaki second term and treasury and banks came into an agreement to prevent a crisis Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Member Joined: 12/1/2007 Posts: 539 Location: Nakuru
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KulaRaha wrote:obiero wrote:KulaRaha wrote:rate cap, no rate cap, no difference, won't increase access to credit either way. That's the whole truth. Note is that retail segment was not affected at all but the SME and corporate are driving the repeal agenda. Not even because of the 14% but the 7% floor tbh rate cap saved banks from huge unsecured bad debt portfolios...imagine Kenyans who had borrowed to buy tvs/empty plots and drinks on weekends trying repay in the current economic environment... CHicken-egg... part ot 'the current environment' is due to low credit uptake due to stringency of the banks in giving loans (no pricing in risk) For investors as a whole, returns decrease as motion increases ~ WB
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Rank: Veteran Joined: 11/13/2015 Posts: 1,589
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KulaRaha wrote:Ericsson wrote:KulaRaha wrote:rate cap, no rate cap, no difference, won't increase access to credit either way. But will enable GoK/Rotich access to $1.5bn from IMF They've never used that facility for as long as they've had it... And it's not like it's another loan to spend on useless projects... Waste of time imo We got into this rate cap mess because of the lack of such a facility. In 2015 the currency came under speculative attack because CBK ran out of reserves trying to burn speculators(yours truly included  ). CBK played the same 2011 rule book by hiking t-bill rates and banks hiked interest rates so that you couldn't borrow from the banks @13% to buy the tbills at 26%. A standby facility is crucial especially with our trade deficit position.
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Rank: Elder Joined: 7/26/2007 Posts: 6,514
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winmak wrote:KulaRaha wrote:obiero wrote:KulaRaha wrote:rate cap, no rate cap, no difference, won't increase access to credit either way. That's the whole truth. Note is that retail segment was not affected at all but the SME and corporate are driving the repeal agenda. Not even because of the 14% but the 7% floor tbh rate cap saved banks from huge unsecured bad debt portfolios...imagine Kenyans who had borrowed to buy tvs/empty plots and drinks on weekends trying repay in the current economic environment... CHicken-egg... part ot 'the current environment' is due to low credit uptake due to stringency of the banks in giving loans (no pricing in risk) Nope. The current environment is purely created by GoK borrowing and inability to pay suppliers, nothing to do with banks. That is a fallacy. Banks would have reduced loans whether there was a cap or not...some sooner, others later. Business opportunities are like buses,there's always another one coming
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Rank: Veteran Joined: 4/23/2014 Posts: 909
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End of cheap loans as Uhuru okays scraping of Interest rate by September Read more at: https://www.standardmedi...k-loans-set-to-end-soon
“You can get in way more trouble with a good idea than a bad idea, because you forget that the good idea has limits.” - Ben Graham
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Rank: Elder Joined: 7/21/2010 Posts: 6,183 Location: nairobi
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why that far or it was forced unwillingly "Don't let the fear of losing be greater than the excitement of winning."
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Rank: Member Joined: 10/6/2009 Posts: 587
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mlennyma wrote:why that far or it was forced unwillingly I think the International Mater F***ers (IMF) should have consulted the mad pigs in the pigsty (parliament) first before meeting Uhuru. Right now, most if not all of them are enjoying the cheap loans and adjusting the interest upward and hence the loans repayments may not resonate well with them. What happens if they throw that interest rate decapping proposal through the window?
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Rank: Elder Joined: 7/21/2010 Posts: 6,183 Location: nairobi
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Baratang wrote:mlennyma wrote:why that far or it was forced unwillingly I think the International Mater F***ers (IMF) should have consulted the mad pigs in the pigsty (parliament) first before meeting Uhuru. Right now, most if not all of them are enjoying the cheap loans and adjusting the interest upward and hence the loans repayments may not resonate well with them. What happens if they throw that interest rate decapping proposal through the window? The president knows his mps nobody can dare challenge "Don't let the fear of losing be greater than the excitement of winning."
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Rank: Elder Joined: 9/20/2015 Posts: 2,811 Location: Mombasa
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mlennyma wrote:Baratang wrote:mlennyma wrote:why that far or it was forced unwillingly I think the International Mater F***ers (IMF) should have consulted the mad pigs in the pigsty (parliament) first before meeting Uhuru. Right now, most if not all of them are enjoying the cheap loans and adjusting the interest upward and hence the loans repayments may not resonate well with them. What happens if they throw that interest rate decapping proposal through the window? The president knows his mps nobody can dare challenge Yeah...Mr. President knows he's fully supported by sycophants in the house. John 5:17 But Jesus replied, “My Father is always working, and so am I.”
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Rank: Elder Joined: 12/4/2009 Posts: 10,678 Location: NAIROBI
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mlennyma wrote:why that far or it was forced unwillingly To give kenyans time to prepare accordingly Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Elder Joined: 10/18/2008 Posts: 3,434 Location: Kerugoya
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Spikes wrote:Yeah...Mr. President knows he's fully supported by sycophants in the house. On this issue, The Jury is still out. Copy and Paste extract:Quote:Calls by International Monetary Fund to abolish or modify the Interest rate cap are in bad faith and will disadvantage ordinary citizens.
Kiambu Member of parliament Jude Njomo said IMF is using biased data from the Kenya Bankers Association to push their agenda without interests of the public.
Njomo introduced the interest rate cap bill to parliament in 2015 to cap banking lending rates.
The bill signed to law by President Uhuru Kenyatta in September 2016 has seen many banks, policy makers and Key stakeholders in the financial sector call for its repeal claiming that it is hurting the economy.
“IMF can only advice us but not tell us what to do, we are an independent state and the decision to scrap the laws lies with the National Assembly which passed them,” Njomo said.
According to IMF, the controls are undermining effectiveness of monetary policy aimed at ensuring price stability and supporting sustainable economic growth.
He criticised the international policy maker on matters finance for using data from KBA that is not independent instead of carrying out their own research.
Source Link: The Star
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Rank: Elder Joined: 12/4/2009 Posts: 10,678 Location: NAIROBI
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aemathenge wrote:Spikes wrote:Yeah...Mr. President knows he's fully supported by sycophants in the house. On this issue, The Jury is still out. Copy and Paste extract:Quote:Calls by International Monetary Fund to abolish or modify the Interest rate cap are in bad faith and will disadvantage ordinary citizens.
Kiambu Member of parliament Jude Njomo said IMF is using biased data from the Kenya Bankers Association to push their agenda without interests of the public.
Njomo introduced the interest rate cap bill to parliament in 2015 to cap banking lending rates.
The bill signed to law by President Uhuru Kenyatta in September 2016 has seen many banks, policy makers and Key stakeholders in the financial sector call for its repeal claiming that it is hurting the economy.
“IMF can only advice us but not tell us what to do, we are an independent state and the decision to scrap the laws lies with the National Assembly which passed them,” Njomo said.
According to IMF, the controls are undermining effectiveness of monetary policy aimed at ensuring price stability and supporting sustainable economic growth.
He criticised the international policy maker on matters finance for using data from KBA that is not independent instead of carrying out their own research.
Source Link: The Star The law was good but the Government and treasury abused it. Jude Njomo should have studied what NARC did in its first term to bring down the lending rates without passing a law Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Elder Joined: 2/26/2012 Posts: 15,980
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"There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
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Rank: Member Joined: 6/6/2016 Posts: 165 Location: Nairobi
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this IMF is in bed with western DFIs who then disburse these loans through the local banks and expect good returns on them. how they have succeeded in keeping such questionable motives out of this discussion is impressive. the banks were crying doom and gloom when the law was signed.. its earnings season and things are BAU
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Rank: New-farer Joined: 10/3/2014 Posts: 20
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snifadog wrote:this IMF is in bed with western DFIs who then disburse these loans through the local banks and expect good returns on them. how they have succeeded in keeping such questionable motives out of this discussion is impressive. the banks were crying doom and gloom when the law was signed.. its earnings season and things are BAU You are very right, selfish motives! They take advantage of Africans all the time. IFC (a World Bank private sector funding agency) recently loaned Co-op bank cash to be advanced to SMEs. No one connected this story with the interest rate capping/ IMF debate. We are being forced to give the west good returns. The impact on Interest Rate Capping on Banks is only reduced profits....
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Rank: Elder Joined: 12/4/2009 Posts: 10,678 Location: NAIROBI
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Kenya central bank cuts main lending rate to 9.5 pctKenya’s central bank cut its benchmark lending rate by 50 basis points to 9.5 percent on Monday, the bank’s monetary policy committee said, the first cut since September 2016. Seven out of 11 analysts polled by Reuters expected the committee to hold the rates. The committee, however, said inflation was well anchored and economic growth was not meeting its potential. “There was scope for easing its monetary policy stance in order to support economic activity,” it said in a statement. https://af.reuters.com/a...africaTech/idAFL8N1R14WVWealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Veteran Joined: 11/13/2015 Posts: 1,589
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Ericsson wrote:Kenya central bank cuts main lending rate to 9.5 pctKenya’s central bank cut its benchmark lending rate by 50 basis points to 9.5 percent on Monday, the bank’s monetary policy committee said, the first cut since September 2016. Seven out of 11 analysts polled by Reuters expected the committee to hold the rates. The committee, however, said inflation was well anchored and economic growth was not meeting its potential. “There was scope for easing its monetary policy stance in order to support economic activity,” it said in a statement. https://af.reuters.com/a...fricaTech/idAFL8N1R14WV 'at the risk of perverse consequences'. They lowered the rate by a similar margin in 2016 with no visible effect. If banks were not lending at 14% will they lend more at 13.5% with IFRS9? MPC is nowadays more of a credit rationing committee in the ivory towers.
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