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Law Capping interest rates
Rank: Elder Joined: 12/4/2009 Posts: 10,834 Location: NAIROBI
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The law should have been made to be deposit at 70% of the CBK rate and loans given at a maximum of 70% above the CBK rate. This would have given lifeline to the small banks and credit to SMEs Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Elder Joined: 6/23/2009 Posts: 14,443 Location: nairobi
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Ericsson wrote:The law should have been made to be deposit at 70% of the CBK rate and loans given at a maximum of 70% above the CBK rate.
This would have given lifeline to the small banks and credit to SMEs @Ericsson that would be higher than the former KBRR rule COOP 306,100 ABP 31.96, KEGN 112,100 ABP 10.64, MTNU 131,000 ABP 10.21
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Rank: Elder Joined: 12/4/2009 Posts: 10,834 Location: NAIROBI
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obiero wrote:Ericsson wrote:The law should have been made to be deposit at 70% of the CBK rate and loans given at a maximum of 70% above the CBK rate.
This would have given lifeline to the small banks and credit to SMEs @Ericsson that would be higher than the former KBRR rule Not really; That would mean at the current rates the maximum interest rates bank would offer a loan will be 17% instead of the current 14% Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Elder Joined: 6/23/2009 Posts: 14,443 Location: nairobi
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Ericsson wrote:obiero wrote:Ericsson wrote:The law should have been made to be deposit at 70% of the CBK rate and loans given at a maximum of 70% above the CBK rate.
This would have given lifeline to the small banks and credit to SMEs @Ericsson that would be higher than the former KBRR rule Not really; That would mean at the current rates the maximum interest rates bank would offer a loan will be 17% instead of the current 14% Exactly, while KBRR was 14% plus a K that was determined independently by each bank.. The capping is a game changer that will obviously hurt a few banks and many workers but in my view we should aim for single digit interest regime as happens in most developed economies, backed by a solid credit scoring system COOP 306,100 ABP 31.96, KEGN 112,100 ABP 10.64, MTNU 131,000 ABP 10.21
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Rank: Elder Joined: 12/4/2009 Posts: 10,834 Location: NAIROBI
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@Obiero With the corruption,inflation,mismanagement of the economy,huge government borrowing,budget deficit,import-export gap single digit interest rates is a hard nut to crack. We need to fix the mentioned items and single digit interest rates will come automatically Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Veteran Joined: 7/3/2007 Posts: 1,635
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Obi 1 Kanobi wrote:The reality of the interest rates caps is finally coming out. According to CBK latest data, rates cap will be good for the economy in the medium term.
Check out the latest East African paper. Can't find link online though.
Equity is also reverting to robust lending
The sky is falling brigade please read and calm down, the cap stays on. Memo to: 'The Sky is Falling Department" Here you go: Numbers don't lieYou are welcome  "The opposite of a correct statement is a false statement. But the opposite of a profound truth may well be another profound truth." (Niels Bohr)
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Rank: Veteran Joined: 11/13/2015 Posts: 1,658
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Wakanyugi wrote:Obi 1 Kanobi wrote:The reality of the interest rates caps is finally coming out. According to CBK latest data, rates cap will be good for the economy in the medium term.
Check out the latest East African paper. Can't find link online though.
Equity is also reverting to robust lending
The sky is falling brigade please read and calm down, the cap stays on. Memo to: 'The Sky is Falling Department" Here you go: Numbers don't lieYou are welcome Have you looked at the M1 money supply statistics from 2016 to now? If you did you will like me  all the way to the bank.
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Rank: Veteran Joined: 11/13/2015 Posts: 1,658
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obiero wrote:Ericsson wrote:obiero wrote:Ericsson wrote:The law should have been made to be deposit at 70% of the CBK rate and loans given at a maximum of 70% above the CBK rate.
This would have given lifeline to the small banks and credit to SMEs @Ericsson that would be higher than the former KBRR rule Not really; That would mean at the current rates the maximum interest rates bank would offer a loan will be 17% instead of the current 14% Exactly, while KBRR was 14% plus a K that was determined independently by each bank.. The capping is a game changer that will obviously hurt a few banks and many workers but in my view we should aim for single digit interest regime as happens in most developed economies, backed by a solid credit scoring system Whose interest do you protect as a banker? That of the shareholder who gives the capital, the depositor who wants you to return his money intact or that of the borrower who wants you to finance his fancy projects? If you want the single digit interest rates where is that capital that you will lend at this rate? What is the savings rate in Kenya? Do people with good credit scores usually need risky loans
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Rank: Elder Joined: 6/23/2009 Posts: 14,443 Location: nairobi
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Ericsson wrote:@Obiero
With the corruption,inflation,mismanagement of the economy,huge government borrowing,budget deficit,import-export gap single digit interest rates is a hard nut to crack.
We need to fix the mentioned items and single digit interest rates will come automatically I agree. The system is broken.. Here is proof http://mobile.nation.co....958792-yxh9g5/index.html COOP 306,100 ABP 31.96, KEGN 112,100 ABP 10.64, MTNU 131,000 ABP 10.21
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Rank: Elder Joined: 4/22/2010 Posts: 11,522 Location: Nairobi
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Just noticed that NIC have been crediting interest every end month on my savings account Nice. I think kitambo the amounts were to negligible to notice... possunt quia posse videntur
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Law Capping interest rates
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