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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