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Law Capping interest rates
Rank: Veteran Joined: 11/13/2015 Posts: 1,568
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KulaRaha wrote:Even if the rate cap goes away, why will retail credit expand? Most loans are in arrears at 14%, what will happen if banks adjust upwards to 18%?
It's the economy, stupid.... You need to let the market work (willing lender/willing borrower). Efficient allocation of resources is best left to the market not to some committee of bureaucrats and pensioners. Creative destruction needs to happen in the economy. Bad businesses that can't afford to pay at market rate should just die because they are wasting resources. New businesses need that capital to thrive should get it. The economy should not suffer because of zombies. There are many young people who may never find a decent job in their prime years because we are busy propping up zombies like mumias, uchumi. Insolvency laws should deal with those who can't adjust to 18%
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Rank: Member Joined: 2/20/2007 Posts: 767
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wukan wrote:KulaRaha wrote:Even if the rate cap goes away, why will retail credit expand? Most loans are in arrears at 14%, what will happen if banks adjust upwards to 18%?
It's the economy, stupid.... You need to let the market work (willing lender/willing borrower). Efficient allocation of resources is best left to the market not to some committee of bureaucrats and pensioners. Creative destruction needs to happen in the economy. Bad businesses that can't afford to pay at market rate should just die because they are wasting resources. New businesses need that capital to thrive should get it. The economy should not suffer because of zombies. There are many young people who may never find a decent job in their prime years because we are busy propping up zombies like mumias, uchumi. Insolvency laws should deal with those who can't adjust to 18% Very flawed conclusions. Are you saying farmers should compete with mitumba traders for credit at 18%. Its obvious who will win thisshort sighted approach to credit. Eventually, the whole country is the loser. While EU and America are trying desperately to ensure their farmers are in business by giving subsidies and through market protection, we are busy telling our producers to compete with importers of chinese and japanese junk. Kweli tuko na shida. They must find it difficult....... those who have taken authority as the truth, rather than truth as the authority. -G. Massey.
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Rank: Elder Joined: 6/23/2009 Posts: 13,475 Location: nairobi
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tom_boy wrote:wukan wrote:KulaRaha wrote:Even if the rate cap goes away, why will retail credit expand? Most loans are in arrears at 14%, what will happen if banks adjust upwards to 18%?
It's the economy, stupid.... You need to let the market work (willing lender/willing borrower). Efficient allocation of resources is best left to the market not to some committee of bureaucrats and pensioners. Creative destruction needs to happen in the economy. Bad businesses that can't afford to pay at market rate should just die because they are wasting resources. New businesses need that capital to thrive should get it. The economy should not suffer because of zombies. There are many young people who may never find a decent job in their prime years because we are busy propping up zombies like mumias, uchumi. Insolvency laws should deal with those who can't adjust to 18% Very flawed conclusions. Are you saying farmers should compete with mitumba traders for credit at 18%. Its obvious who will win thisshort sighted approach to credit. Eventually, the whole country is the loser. While EU and America are trying desperately to ensure their farmers are in business by giving subsidies and through market protection, we are busy telling our producers to compete with importers of chinese and japanese junk. Kweli tuko na shida. It's a harsh reality @tom_boy.. As I told you once on this very thread, you have brilliant ideas but they are disjointed from the reality of this jungle called Kenya. By the way most of the mitumba traders on the container scale would never borrow as they are cash rich.. The building in which COOP trades along Landhies Road was owned by a mitumba trader named Zipporah Kanyi Wanjiku who sold it to Ukulima Sacco! I too would love to farm, but instead I choose to invest in real estate coz that's where the money is found
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 15,750 ABP 6.45
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Rank: Elder Joined: 12/7/2012 Posts: 11,901
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obiero wrote:tom_boy wrote:wukan wrote:KulaRaha wrote:Even if the rate cap goes away, why will retail credit expand? Most loans are in arrears at 14%, what will happen if banks adjust upwards to 18%?
It's the economy, stupid.... You need to let the market work (willing lender/willing borrower). Efficient allocation of resources is best left to the market not to some committee of bureaucrats and pensioners. Creative destruction needs to happen in the economy. Bad businesses that can't afford to pay at market rate should just die because they are wasting resources. New businesses need that capital to thrive should get it. The economy should not suffer because of zombies. There are many young people who may never find a decent job in their prime years because we are busy propping up zombies like mumias, uchumi. Insolvency laws should deal with those who can't adjust to 18% Very flawed conclusions. Are you saying farmers should compete with mitumba traders for credit at 18%. Its obvious who will win thisshort sighted approach to credit. Eventually, the whole country is the loser. While EU and America are trying desperately to ensure their farmers are in business by giving subsidies and through market protection, we are busy telling our producers to compete with importers of chinese and japanese junk. Kweli tuko na shida. It's a harsh reality @tom_boy.. As I told you once on this very thread, you have brilliant ideas but they are disjointed from the reality of this jungle called Kenya. By the way most of the mitumba traders on the container scale would never borrow as they are cash rich.. The building in which COOP trades along Landhies Road was owned by a mitumba trader named Zipporah Kanyi Wanjiku who sold it to Ukulima Sacco! I too would love to farm, but instead I choose to invest in real estate coz that's where the money is found Subsidies (like to farmers or a sector)is given by Governments not private institutions like banks!!! In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
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Rank: Elder Joined: 6/23/2009 Posts: 13,475 Location: nairobi
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Angelica _ann wrote:obiero wrote:tom_boy wrote:wukan wrote:KulaRaha wrote:Even if the rate cap goes away, why will retail credit expand? Most loans are in arrears at 14%, what will happen if banks adjust upwards to 18%?
It's the economy, stupid.... You need to let the market work (willing lender/willing borrower). Efficient allocation of resources is best left to the market not to some committee of bureaucrats and pensioners. Creative destruction needs to happen in the economy. Bad businesses that can't afford to pay at market rate should just die because they are wasting resources. New businesses need that capital to thrive should get it. The economy should not suffer because of zombies. There are many young people who may never find a decent job in their prime years because we are busy propping up zombies like mumias, uchumi. Insolvency laws should deal with those who can't adjust to 18% Very flawed conclusions. Are you saying farmers should compete with mitumba traders for credit at 18%. Its obvious who will win thisshort sighted approach to credit. Eventually, the whole country is the loser. While EU and America are trying desperately to ensure their farmers are in business by giving subsidies and through market protection, we are busy telling our producers to compete with importers of chinese and japanese junk. Kweli tuko na shida. It's a harsh reality @tom_boy.. As I told you once on this very thread, you have brilliant ideas but they are disjointed from the reality of this jungle called Kenya. By the way most of the mitumba traders on the container scale would never borrow as they are cash rich.. The building in which COOP trades along Landhies Road was owned by a mitumba trader named Zipporah Kanyi Wanjiku who sold it to Ukulima Sacco! I too would love to farm, but instead I choose to invest in real estate coz that's where the money is found Subsidies (like to farmers or a sector)is given by Governments not private institutions like banks!!! Wait. Which bank has been given a subsidy by the state
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 15,750 ABP 6.45
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Rank: Elder Joined: 6/23/2009 Posts: 13,475 Location: nairobi
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Ecobank down http://www.businessdaily...062212-96ntei/index.html
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 15,750 ABP 6.45
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Rank: Member Joined: 10/26/2015 Posts: 151
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If the Banks accede to KQs demands, will the debts reflect on their books as a write off?
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Rank: Elder Joined: 6/23/2009 Posts: 13,475 Location: nairobi
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MadDoc wrote:If the Banks accede to KQs demands, will the debts reflect on their books as a write off? My thinking is that it would be classified as a write off but with a corresponding asset increase classified as listed security, thereafter any gains from sales will be indicated as write backs, with any surplus booked as profit
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 15,750 ABP 6.45
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Rank: Member Joined: 10/26/2015 Posts: 151
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obiero wrote:MadDoc wrote:If the Banks accede to KQs demands, will the debts reflect on their books as a write off? My thinking is that it would be classified as a write off but with a corresponding asset increase classified as listed security, thereafter any gains from sales will be indicated as write backs, with any surplus booked as profit Further drop in profits expected
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Rank: Elder Joined: 6/23/2009 Posts: 13,475 Location: nairobi
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MadDoc wrote:obiero wrote:MadDoc wrote:If the Banks accede to KQs demands, will the debts reflect on their books as a write off? My thinking is that it would be classified as a write off but with a corresponding asset increase classified as listed security, thereafter any gains from sales will be indicated as write backs, with any surplus booked as profit Further drop in profits expected Further drops in which company? Definitely not Kenya Airways
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 15,750 ABP 6.45
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Rank: Member Joined: 10/26/2015 Posts: 151
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obiero wrote:MadDoc wrote:obiero wrote:MadDoc wrote:If the Banks accede to KQs demands, will the debts reflect on their books as a write off? My thinking is that it would be classified as a write off but with a corresponding asset increase classified as listed security, thereafter any gains from sales will be indicated as write backs, with any surplus booked as profit Further drop in profits expected Further drops in which company? Definitely not Kenya Airways I meant the Banks.
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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obiero wrote:MadDoc wrote:If the Banks accede to KQs demands, will the debts reflect on their books as a write off? My thinking is that it would be classified as a write off but with a corresponding asset increase classified as listed security, thereafter any gains from sales will be indicated as write backs, with any surplus booked as profit Probably write off interest receivable but reclassify the principal loan as from loan to investment. Life is short. Live passionately.
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Rank: Elder Joined: 6/23/2009 Posts: 13,475 Location: nairobi
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sparkly wrote:obiero wrote:MadDoc wrote:If the Banks accede to KQs demands, will the debts reflect on their books as a write off? My thinking is that it would be classified as a write off but with a corresponding asset increase classified as listed security, thereafter any gains from sales will be indicated as write backs, with any surplus booked as profit Probably write off interest receivable but reclassify the principal loan as from loan to investment. Exactly. There's no other way around this
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 15,750 ABP 6.45
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Rank: Veteran Joined: 8/28/2015 Posts: 1,247
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sparkly wrote:obiero wrote:MadDoc wrote:If the Banks accede to KQs demands, will the debts reflect on their books as a write off? My thinking is that it would be classified as a write off but with a corresponding asset increase classified as listed security, thereafter any gains from sales will be indicated as write backs, with any surplus booked as profit Probably write off interest receivable but reclassify the principal loan as from loan to investment. Why not capitalise interest together with other costs of acquiring the investment at the date of conversion. I believe the consideration at the date of conversion is consists the principal interests accrued:/d and etc ,Behold, a sower went forth to sow;....
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Rank: Elder Joined: 6/23/2009 Posts: 13,475 Location: nairobi
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muandiwambeu wrote:sparkly wrote:obiero wrote:MadDoc wrote:If the Banks accede to KQs demands, will the debts reflect on their books as a write off? My thinking is that it would be classified as a write off but with a corresponding asset increase classified as listed security, thereafter any gains from sales will be indicated as write backs, with any surplus booked as profit Probably write off interest receivable but reclassify the principal loan as from loan to investment. Why not capitalise interest together with other costs of acquiring the investment at the date of conversion. I believe the consideration at the date of conversion is consists the principal interests accrued:/d and etc The same is not a 'lost' investment but rather a converted debt so ideally any amount not collected shall be accounted in the books
HF 30,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 15,750 ABP 6.45
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Rank: Member Joined: 10/6/2015 Posts: 249 Location: Nairobi
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obiero wrote:Partial reversal of the cap now almost guaranteed with a Uhuru win I bet gava will blink first.... http://www.businessdaily...64280-3pll40z/index.htmlNever lose your position in a bull market,BTFD.
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Rank: Veteran Joined: 7/5/2010 Posts: 2,061 Location: Nairobi
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How is CBA doing compared to other banks?
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Rank: Elder Joined: 12/7/2012 Posts: 11,901
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mamilli wrote:[quote=obiero]Partial reversal of the cap now almost guaranteed with a Uhuru win I bet gava will blink first.... http://www.businessdaily...4280-3pll40z/index.html[/quote] Among our 40+ banks, there is none who is creative and innovative and able to develop ways to exploit this law to their advantage!!!  In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
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Rank: Member Joined: 4/14/2010 Posts: 806 Location: Nairobi
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Angelica _ann wrote:mamilli wrote:[quote=obiero]Partial reversal of the cap now almost guaranteed with a Uhuru win I bet gava will blink first.... http://www.businessdaily...4280-3pll40z/index.html[/quote] Among our 40+ banks, there is none who is creative and innovative and able to develop ways to exploit this law to their advantage!!! @Angelica...that advantage must outweigh other existing opportunities on a risk adjusted basis. Currently it will be hard to beat investing in T/bonds on a risk adjusted basis.
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Rank: Veteran Joined: 10/29/2008 Posts: 1,566
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Good question to the proponents of the interest caps as it stands currently. Isuni yilu yi maa me muyo - ni Mbisuu
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