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Law Capping interest rates
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MaichBlack
#2881 Posted : Thursday, October 24, 2019 11:16:05 PM
Rank: Elder

Joined: 7/22/2009
Posts: 8,003
Rongla wrote:
MaichBlack wrote:
Sad that it took the government this long to realise something we realised and stated here before the president appended his signature on the interest control bill!!!

I can never give a random individual a loan at the same rate as Safaricom or BAT. I can never give KQ a loan at the same rate as EABL!!! A first year economics student knows this!!!


That was exactly what the banks were doing before the rate cap. They were literally abusing the goodwill of their good customers by over charging them high interest to carter for their Non performing loans.

Even if the rate cap goes, measures should be put in place to protect goid borrowers. The CRB is not enough

Negative. Banks had a base rate onto which they then loaded the risk.

Check at what rate Safaricom was getting loans at before the interest rate caps. Employers also used to "guarantee" employees loans and the employees got loans at a much lower rate. The employer committed to deduct payments at source and forward the same to the bank and also if the employee was no longer in employment, deduct his benefits to clear the loan. This greatly reduced the risk and consequently the interest rate.
Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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MaichBlack
#2882 Posted : Thursday, October 24, 2019 11:19:49 PM
Rank: Elder

Joined: 7/22/2009
Posts: 8,003
Ericsson wrote:
MaichBlack wrote:
ngapat wrote:
Cap should be maintained but adjusted. They can slightly increase the interest margins. They could also classify loans i.e secured and non secured. The can then widen the interest margins on non secured loans

All these suggestions/ideas have been overtaken by time.


If the caps remained the economy was grinding to a halt.

That is what some people are refusing to see.

Any business owner will tell you a loan at 21% for example is a hundred times better than no credit!!!
Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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VituVingiSana
#2883 Posted : Thursday, October 24, 2019 11:34:24 PM
Rank: Chief

Joined: 1/3/2007
Posts: 18,426
Location: Nairobi
Ericsson wrote:
MaichBlack wrote:
ngapat wrote:
Cap should be maintained but adjusted. They can slightly increase the interest margins. They could also classify loans i.e secured and non secured. The can then widen the interest margins on non secured loans

All these suggestions/ideas have been overtaken by time.

If the caps remained the economy was grinding to a halt.

The problem were not the rate caps as much as GoK borrowing. If GoK borrowed less, leading to lower T-Bill/TBond rates, then more funds would flow into the private sector.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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MaichBlack
#2884 Posted : Friday, October 25, 2019 6:42:39 AM
Rank: Elder

Joined: 7/22/2009
Posts: 8,003
VituVingiSana wrote:
Ericsson wrote:
MaichBlack wrote:
ngapat wrote:
Cap should be maintained but adjusted. They can slightly increase the interest margins. They could also classify loans i.e secured and non secured. The can then widen the interest margins on non secured loans

All these suggestions/ideas have been overtaken by time.

If the caps remained the economy was grinding to a halt.

The problem were not the rate caps as much as GoK borrowing. If GoK borrowed less, leading to lower T-Bill/TBond rates, then more funds would flow into the private sector.

But if Banks were not allowed to price in risk they only do the ONLY logical thing. Lend only to those with extremely low risk!!

SMEs are very important when it comes to economic growth. They are also a very risky segment. They therefore get no credit (with interest rate controls). Economy performs worse, SMEs become riskier... vicious cycle!!!
Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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mlennyma
#2885 Posted : Friday, October 25, 2019 9:51:39 AM
Rank: Elder

Joined: 7/21/2010
Posts: 6,194
Location: nairobi
MaichBlack wrote:
ngapat wrote:
Cap should be maintained but adjusted. They can slightly increase the interest margins. They could also classify loans i.e secured and non secured. The can then widen the interest margins on non secured loans

All these suggestions/ideas have been overtaken by time.

True and we have no time for such discussions
"Don't let the fear of losing be greater than the excitement of winning."
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VituVingiSana
#2886 Posted : Friday, October 25, 2019 1:58:53 PM
Rank: Chief

Joined: 1/3/2007
Posts: 18,426
Location: Nairobi
MaichBlack wrote:
VituVingiSana wrote:
Ericsson wrote:
MaichBlack wrote:
ngapat wrote:
Cap should be maintained but adjusted. They can slightly increase the interest margins. They could also classify loans i.e secured and non secured. The can then widen the interest margins on non secured loans

All these suggestions/ideas have been overtaken by time.

If the caps remained the economy was grinding to a halt.

The problem were not the rate caps as much as GoK borrowing. If GoK borrowed less, leading to lower T-Bill/TBond rates, then more funds would flow into the private sector.

But if Banks were not allowed to price in risk they only do the ONLY logical thing. Lend only to those with extremely low risk!!

SMEs are very important when it comes to economic growth. They are also a very risky segment. They therefore get no credit (with interest rate controls). Economy performs worse, SMEs become riskier... vicious cycle!!!

I think we are saying the same thing.
High TBill/Bond rates meant these were better for banks on a risk/reward basis. If GoK reduced borrowing leading to lower rates, then banks would start seeing better value in lending to the private sector.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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obiero
#2887 Posted : Saturday, October 26, 2019 6:28:23 PM
Rank: Elder

Joined: 6/23/2009
Posts: 14,443
Location: nairobi
VituVingiSana wrote:
MaichBlack wrote:
VituVingiSana wrote:
Ericsson wrote:
MaichBlack wrote:
ngapat wrote:
Cap should be maintained but adjusted. They can slightly increase the interest margins. They could also classify loans i.e secured and non secured. The can then widen the interest margins on non secured loans

All these suggestions/ideas have been overtaken by time.

If the caps remained the economy was grinding to a halt.

The problem were not the rate caps as much as GoK borrowing. If GoK borrowed less, leading to lower T-Bill/TBond rates, then more funds would flow into the private sector.

But if Banks were not allowed to price in risk they only do the ONLY logical thing. Lend only to those with extremely low risk!!

SMEs are very important when it comes to economic growth. They are also a very risky segment. They therefore get no credit (with interest rate controls). Economy performs worse, SMEs become riskier... vicious cycle!!!

I think we are saying the same thing.
High TBill/Bond rates meant these were better for banks on a risk/reward basis. If GoK reduced borrowing leading to lower rates, then banks would start seeing better value in lending to the private sector.

Nothing but the truth
COOP 306,100 ABP 31.96, KEGN 112,100 ABP 10.64, MTNU 131,000 ABP 10.21
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FUNKY
#2888 Posted : Tuesday, October 29, 2019 10:39:26 PM
Rank: Veteran

Joined: 4/30/2010
Posts: 1,635
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Ericsson
#2889 Posted : Tuesday, October 29, 2019 11:29:36 PM
Rank: Elder

Joined: 12/4/2009
Posts: 10,834
Location: NAIROBI
FUNKY wrote:
https://www.nation.co.ke/news/MPs-agree-with-Uhuru-on-repealing-interest-caps/1056-5329594-view-asAMP-hnccjxz/index.html?__twitter_impression=true


Biggest beneficiaries is Mpigs
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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newfarer
#2890 Posted : Wednesday, October 30, 2019 6:32:54 AM
Rank: Elder

Joined: 3/19/2010
Posts: 3,505
Location: Uganda
“Notwithstanding the repeal of section 33 B, any agreement or arrangement to borrow or lend which was made or entered into...shall continue to be in force on such terms, including interest rates and for the duration specified in the agreement or arrangement,Applause Applause Applause

now the new rate can go to 1001% who cares
punda amecheka
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  | | Edit by user: Wednesday, October 30, 2019 6:34 AM | Reason: Not specified
303 Pages«<287288289290291>»
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