Its really heart-breaking following some of these arguments. The rate capping experiment has run for two full years. Its been a total flop. But the ruling class has just found a new bogeyman, greedy banks. Not the governments insatiable appetite and reckless spending. And it is nauseating when the cheering squad includes folks from this forum.

That someone on this forum could actually believe that MPs refused to repeal the rate capping out of altruism is beyond belief. The same MPs increased the mandatory housing fund contribution from the 0.5% recommended to 1.5%. Never mind that unlike NSSF or NHIF, the contributor to this new cash cow has no benefit. The same MPs passed the 16% VAT on fuel. But they are so caring for the common man that they refused to remove the rate cap on interest rates.

@FRM2011, I borrowed some money to accomplish a task three years ago and I have been repaying the loan at close to kshs 110k per month. Before the rate cap the monthly repayment stood at kshs 130k. So you want me to go to a rooftop pissing metal, curse all and sundry and cry out loudly because the rates cap law is not being repealed???
I am not knowledgeable in the financial fields but I know when I am really oppressed. On this one from a Wanjiku perspective, whether the mpigs are caring or not, neenda ukawahubirie watu wenu hiyo injiri...the rate cap has so far saved me a cool kshs 1/4 million!!!

was able to secure a substantial amount of loan in March this year to finalize some pending projects without much sweat ,do you want me to cry that the capping is not going
.to hell with abnormal profits .its wanjikus time to eat.
.one man poison another man's food

What this scenario leads to is:
1.Banks move from retail (mwananchi) & SME banking to investment banking.They will specialise is bonds,bills,papers,syndicated loans etc.
2.They will move to micro lending...every bank will have an Mshwari type product coz you can flip the capital many times over in a year.

The two above cannot help Mwananchi develop.SMEs are totally left out. You are lucky if payslipped and working for a big company...else...

Wanjiku and SME's just need to be educated on loans application process, the era of walking into a bank with some logbook or title deed is now long gone. Try approaching a bank with a well laid out business plan demonstrating ability to pay and a strong credit history and for sure regardless of size of your business, you will walk out with the loan you wanted.

IFRS 9 has put alot of emphasis on provisioning for bad and doubtfull debt and this will impact access to high risk loans from banks even more than the rate cap.

Is it parliament with the last word on this law or is there another avenue for repeal?
in my opinion the rate cap, the fuel price and any other business price fixing should be left to the market to decide.

The only appeal is the IMF. But since Chinaman showed up on the scene, Christine Largade's mojo has been servery curtailed.

P.S. Of course there is the President's veto too, but Uhuru is not going to risk his big 4 by starting a fight with Parliament - the Finance bill is usually an Omnibus (pass it all or reject it all). Can you see the headlines? "Uhuru rejects bill to save Banks." Plus the MP's already gave him his 16% VAT on fuel etc, despite the screams of Wanjiku.

These banks seem to forget that what they offer is a product that can either be bought or not. Its not a favor that they are offering us we pay cost plus profit(interest). If they don't sell their products then they lose,and are left with unsold products. They should not expect us to come pleading on our knees to buy from them.

Do you know who can teach the banks a lesson they will never forget ? The market.

You may never know this but around year 2003, 91-day t-bill rate dropped to between 1-2%. Stanbic started lending @ 8%. I know its unfair to compare Kibaki to Jubilee or Jude Njomo, but still.

Around the year 2000, BBK and Stanchart left what they decided were non-viable towns. Equity and Family Bank quickly moved into these towns. In several towns, Family bank took over BBK's premises as they were. They didn't even spend a shilling to renovate or paint (both share same corporate colour). Then Kibaki happened. You should see the kiosk that Barclays operates from in a town called Kerugoya after they came back tail betweens the legs. A few meters from them, Family bank roars from BBK's old premises. The market knows how to punish those who don't respond to the needs of their customers.

As it is, banks are still making super profits, but we can't get loans.

If government reduces borrowing,currency stabilises;lending rates will fall to single digits.
Banks are still making super profits due to lending to government.
How many staff and branches do you need to lend to government ksh.1bn?