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Law Capping interest rates
lochaz-index
#2441 Posted : Tuesday, March 20, 2018 1:12:41 PM
Rank: Veteran


Joined: 9/18/2014
Posts: 1,127
wukan wrote:
Ericsson wrote:
Kenya central bank cuts main lending rate to 9.5 pct
Kenya’s central bank cut its benchmark lending rate by 50 basis points to 9.5 percent on Monday, the bank’s monetary policy committee said, the first cut since September 2016.

Seven out of 11 analysts polled by Reuters expected the committee to hold the rates. The committee, however, said inflation was well anchored and economic growth was not meeting its potential.

“There was scope for easing its monetary policy stance in order to support economic activity,” it said in a statement.

https://af.reuters.com/a...fricaTech/idAFL8N1R14WV


smile smile 'at the risk of perverse consequences'. They lowered the rate by a similar margin in 2016 with no visible effect. If banks were not lending at 14% will they lend more at 13.5% with IFRS9?

MPC is nowadays more of a credit rationing committee in the ivory towers.

Interest caps managed to flip the monetary policy where up is down and down is up. Want to ration credit and prop the KES - cut the CBR and vice versa.

This recent action by the MPC could be construed as testing the waters incase things get messy before the rate cap is modified or repealed as dictated by the IMF overlords. With eurobond 2.0 already in the consolidated fund, there was no justification for a rate cut in the immediate horizon.
The main purpose of the stock market is to make fools of as many people as possible.
wukan
#2442 Posted : Wednesday, March 21, 2018 10:24:24 AM
Rank: Veteran


Joined: 11/13/2015
Posts: 1,567
Reading this CBK report on impacts of interest capping

Perverse outcomessmile

1. In the first three months of interest rate capping the number of loan applications increased by 20 percent. However, between December 2016 and April 2017, the growth of loan applications decelerated to 2.3 percent.

2. The average loan size has increased by 36.7 percent between October 2016 and June 2017. The rising value of loan size vis-à-vis reduced number of loan accounts reflects lower access to small borrowers and larger loans to more established firms after the imposition of the caps.

3. The number and value of mobile loan approvals have been rising from 4 million in March 2015 to about 9 million in June 2016. Thereafter, the number of approvals remained almost constant with only a temporary dip in September 2016 following the uncertainty as to whether the law applied to mobile loans.

4.Most banks reported increased deposits which were channeled to government securities market instead of enhancing lending to the private sector.

5.Small and medium size banks significantly scaled down accumulation of reserves. Small and medium size banks depleted their reserves or did not have enough profits to shore up their capital base after the caps were introduced.

6. Growth in loans by MFBs declined significantly since late 2016 while that of SACCOs has declined marginally. This suggests that customers being rationed out by the commercial banks are not being accommodated by the institutions.

7. On September 20, 2016, the MPC, in its regular meetings, noted that inflation was expected to decline but had concerns with the slowdown in credit to the private sector. Consequently, it decided to reduce the CBR by 50 basis points to 10.0 percent with the anticipation of reversing the declining trend. However, credit to the private sector continued to decline leading one to conclude that the monetary policy action produced counterintuitive results… a loosening on monetary policy yielding unexpected decline in credit to the private sector.

8. Going forward, under the interest rate capping
regime, there is no guarantee the central bank will be
able to achieve its intended objectives.During the phase of monetary policy loosening to stimulate credit expansion to support growth, the interest rate cap will also adjust downward. As a result, those individuals with credit risk above the capped rate will be shunned by banks thereby leading to contraction in growth of credit to the private sector.
obiero
#2443 Posted : Tuesday, March 27, 2018 9:57:04 PM
Rank: Elder


Joined: 6/23/2009
Posts: 13,464
Location: nairobi
obiero wrote:
obiero wrote:
obiero wrote:
obiero wrote:
obiero wrote:
sparkly wrote:
obiero wrote:
MaichBlack wrote:
obiero wrote:
I told you guys to sell off bank stocks in 2014. Luckily made it out of some major holdings in good time..

so, what do you expect to be a fair hair cut on obieros portfolio as a result of kamwanaas house attempt to please Wanjiku. what will be the overall industries' hit in percentage. my fair guess from my lender's perspective
(16-14.5)/(16*0.5)*100=18.75% conservetively
thieves.

COOP & HF will come out strongest in this.. Too little meat to be bitten out from the two. Plus HF has never been strong on deposits being only licensed to have current accounts a few months ago!! HF will have the least interest expense of all listed lenders

Hey @Obiero. Bill not signed. And please note I did not put the word 'yet' at the end.

Its bound to be signed on Monday 29th Aug 2016

The bankers will visit statehouse with big brown envelop and this story will be forgotten.

Smaller banks will fold

Here we are...
Family fires it's staff https://citizentv.co.ke/...fs-to-cut-costs-143841/
and then Sidian lays off 108 workers http://www.businessdaily...9550-3428588-151f209z/,
then Ecobank collapses 9 branches http://www.businessdaily...6506-316lohz/index.html
First Community Bank let go of a quarter of its staff http://www.the-star.co.k...osed-number-of_c1451638
And now BoA closes 12 branches. Sad state of affairs http://www.businessdaily...2926-jp394sz/index.html

Sidian, NBK, Family, HF, NIC struggling.. Small banks shall fold

Family Bank et al in distress.. You know where you got the information first over a year ago

HF 428,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 15,750 ABP 6.45
obiero
#2444 Posted : Thursday, March 29, 2018 7:50:56 AM
Rank: Elder


Joined: 6/23/2009
Posts: 13,464
Location: nairobi
UBA, GT banks down in PBT by double digits. Sidian slides into loss of KES 632m

HF 428,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 15,750 ABP 6.45
aemathenge
#2445 Posted : Sunday, April 08, 2018 7:55:09 PM
Rank: Elder


Joined: 10/18/2008
Posts: 3,434
Location: Kerugoya
Accountants Oppose Scrapping of Law Capping Lending Charges

Sunday Nation Extract dated 08 April 2018

Quote:
“As an institute, we continue to support interest rate capping as the benefits outweigh the hiccups faced so far,” ICPAK chairman Julius Mwatu said on Friday.

“We believe that the challenges experienced with lending in the recent past are not directly attributable to the interest rate caps.

Therefore, any discussions to consider scrapping of the interest rates caps should ensure that the initial objectives of the capping are maintained.”

…. Mr Mwatu warned that removing the rate controls without addressing the initial challenge of high cost of credit before the rate cap regime came into place would hurt borrowers.

“We believe that the discussion to lift interest rate caps should be preceded by operationalisation of other mechanisms that will allow a self-regulatory regime such as use of credit rating information,” said Mr Mwatu.

Consumer lobbies have similarly warned that while the subsequent credit crunch after the law was effected in September 2016 bear serious implications to the private sector, scrapping the controls altogether may not be the panacea, and would in fact lead the country back to the era of high rates whose consumer outcry prompted the controls in the first place.

“The reasons, which necessitated the capping regime have not been mitigated upon.

CBK must balance market and consumer interests going forward,” said Consumer Federation of Kenya (Cofek) secretary-general Stephen Mutoro earlier.


Source Link:
Ericsson
#2446 Posted : Wednesday, April 11, 2018 10:04:08 AM
Rank: Elder


Joined: 12/4/2009
Posts: 10,626
Location: NAIROBI
If the interest rates cap law is repealed in september,the effects of it will be felt in 2019.
For those waiting for banks profitability to rebound,that will be from FY2019.
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
Ngalaka
#2447 Posted : Wednesday, April 11, 2018 10:19:25 AM
Rank: Veteran


Joined: 10/29/2008
Posts: 1,566
Ericsson wrote:
If the interest rates cap law is repealed in september,the effects of it will be felt in 2019.
For those waiting for banks profitability to rebound,that will be from FY2019.

Effect on returns can never be felt or reported instantaneously.
However, effect on stock movement at the NSE can be.
Isuni yilu yi maa me muyo - ni Mbisuu
Sir invest
#2448 Posted : Friday, April 13, 2018 9:14:22 AM
Rank: Member


Joined: 8/19/2015
Posts: 124
The CBK Gvr might be shown the door for colluding with banks/KBA to deny Individuals and SMEs credit in an aim to force a repeal #Interest rate capping Law!!!
mlennyma
#2449 Posted : Friday, April 13, 2018 10:41:00 AM
Rank: Elder


Joined: 7/21/2010
Posts: 6,173
Location: nairobi
Sir invest wrote:
The CBK Gvr might be shown the door for colluding with banks/KBA to deny Individuals and SMEs credit in an aim to force a repeal #Interest rate capping Law!!!

Does he also control IMF?
"Don't let the fear of losing be greater than the excitement of winning."
KulaRaha
#2450 Posted : Friday, April 13, 2018 11:24:37 AM
Rank: Elder


Joined: 7/26/2007
Posts: 6,514
Sir invest wrote:
The CBK Gvr might be shown the door for colluding with banks/KBA to deny Individuals and SMEs credit in an aim to force a repeal #Interest rate capping Law!!!


The guy is academically clever, but very unwise and rash...bad bad decisions throughout his tenure so far...d'oh!
Business opportunities are like buses,there's always another one coming
sparkly
#2451 Posted : Friday, April 13, 2018 11:48:45 AM
Rank: Elder


Joined: 9/23/2009
Posts: 8,083
Location: Enk are Nyirobi
Ngalaka wrote:
Ericsson wrote:
If the interest rates cap law is repealed in september,the effects of it will be felt in 2019.
For those waiting for banks profitability to rebound,that will be from FY2019.

Effect on returns can never be felt or reported instantaneously.
However, effect on stock movement at the NSE can be.


True Stock prices reflect future information.
Life is short. Live passionately.
HaMaina
#2452 Posted : Friday, April 13, 2018 12:02:25 PM
Rank: Veteran


Joined: 4/23/2014
Posts: 903
Now the depate is taken from the streets to the house where the true hustlers lieApplause Applause Applause Applause Applause Applause Applause Applause Applause Applause Applause Applause Applause Applause Applause Applause

MPs accuse central bank, IMF of conspiracy against rates cap law

https://www.businessdail...1254-21g1rmz/index.html

MPs oppose CBK Governor's bid to undo interest rate capping
Read more at: https://www.standardmedi...o-interest-rate-capping
“You can get in way more trouble with a good idea than a bad idea, because you forget that the good idea has limits.” - Ben Graham
Corleone
#2453 Posted : Friday, April 13, 2018 1:14:46 PM
Rank: Hello


Joined: 1/24/2018
Posts: 2
HaMaina wrote:
Now the depate is taken from the streets to the house where the true hustlers lieApplause Applause Applause Applause Applause Applause Applause Applause Applause Applause Applause Applause Applause Applause Applause Applause

MPs accuse central bank, IMF of conspiracy against rates cap law

https://www.businessdail...1254-21g1rmz/index.html

MPs oppose CBK Governor's bid to undo interest rate capping
Read more at: https://www.standardmedi...o-interest-rate-capping



MPs have huge loans with the banks, it's unlikely they will put a rope on their necks by repealing the law.
Wakanyugi
#2454 Posted : Friday, April 13, 2018 1:25:48 PM
Rank: Veteran


Joined: 7/3/2007
Posts: 1,634
KulaRaha wrote:
Sir invest wrote:
The CBK Gvr might be shown the door for colluding with banks/KBA to deny Individuals and SMEs credit in an aim to force a repeal #Interest rate capping Law!!!


The guy is academically clever, but very unwise and rash...bad bad decisions throughout his tenure so far...d'oh!


He is a terrible politician too. Bringing the evil duo - IMF and World Bank - to bat for him, re: interest rate cap, was just baaaad!

Kwani he did not live in Kenya during the dark days of Structural adjustment?
"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)
Wakanyugi
#2455 Posted : Friday, April 13, 2018 1:31:51 PM
Rank: Veteran


Joined: 7/3/2007
Posts: 1,634
HaMaina wrote:
Now the depate is taken from the streets to the house where the true hustlers lieApplause Applause Applause Applause Applause Applause Applause Applause Applause Applause Applause Applause Applause Applause Applause Applause

MPs accuse central bank, IMF of conspiracy against rates cap law

https://www.businessdail...1254-21g1rmz/index.html

MPs oppose CBK Governor's bid to undo interest rate capping
Read more at: https://www.standardmedi...o-interest-rate-capping


You might want to hold off on opening that bottle of champagne. It is not a done deal by any means.

Essentially the ball will be thrown back at the banks. They need too show how they will guarantee that we shall not return to the usurious state of yore that brought on the current controls.

Blackmail can only take you so far and playing the victim card is looking rather lame when the nosiest big 4 are still raking in huge profits, despite the cap.
"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)
mulla
#2456 Posted : Friday, April 13, 2018 1:32:26 PM
Rank: Member


Joined: 6/15/2013
Posts: 301
KulaRaha wrote:
Sir invest wrote:
The CBK Gvr might be shown the door for colluding with banks/KBA to deny Individuals and SMEs credit in an aim to force a repeal #Interest rate capping Law!!!


The guy is academically clever, but very unwise and rash...bad bad decisions throughout his tenure so far...d'oh!

So that includes the hard stance he took on rogue banks such as Chase, Imperial etc.....???
Ericsson
#2457 Posted : Friday, April 13, 2018 1:48:22 PM
Rank: Elder


Joined: 12/4/2009
Posts: 10,626
Location: NAIROBI
Wakanyugi wrote:
KulaRaha wrote:
Sir invest wrote:
The CBK Gvr might be shown the door for colluding with banks/KBA to deny Individuals and SMEs credit in an aim to force a repeal #Interest rate capping Law!!!


The guy is academically clever, but very unwise and rash...bad bad decisions throughout his tenure so far...d'oh!


He is a terrible politician too. Bringing the evil duo - IMF and World Bank - to bat for him, re: interest rate cap, was just baaaad!

Kwani he did not live in Kenya during the dark days of Structural adjustment?


We took ourselves to IMF and World bank by mismanaging our finances/coffers.
Now we are requesting for help from them and it comes with conditions
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
Ericsson
#2458 Posted : Friday, April 13, 2018 1:50:54 PM
Rank: Elder


Joined: 12/4/2009
Posts: 10,626
Location: NAIROBI
Corleone wrote:
HaMaina wrote:
Now the depate is taken from the streets to the house where the true hustlers lieApplause Applause Applause Applause Applause Applause Applause Applause Applause Applause Applause Applause Applause Applause Applause Applause

MPs accuse central bank, IMF of conspiracy against rates cap law

https://www.businessdail...1254-21g1rmz/index.html

MPs oppose CBK Governor's bid to undo interest rate capping
Read more at: https://www.standardmedi...o-interest-rate-capping



MPs have huge loans with the banks, it's unlikely they will put a rope on their necks by repealing the law.


The MPigs are playing around with the masses psychology.One phone call or summon from state house will change everything.
They will then say we tried our best but we were overpowered.That will guarantee the MPig a re-election come 2022

Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
KulaRaha
#2459 Posted : Friday, April 13, 2018 2:06:24 PM
Rank: Elder


Joined: 7/26/2007
Posts: 6,514
mulla wrote:
KulaRaha wrote:
Sir invest wrote:
The CBK Gvr might be shown the door for colluding with banks/KBA to deny Individuals and SMEs credit in an aim to force a repeal #Interest rate capping Law!!!


The guy is academically clever, but very unwise and rash...bad bad decisions throughout his tenure so far...d'oh!

So that includes the hard stance he took on rogue banks such as Chase, Imperial etc.....???


Hard stances are ok, but the mess he has created has not even started to clear...

It is only when a mosquito lands on your testicles that you realize There is always a way to solve problems without using violence
Business opportunities are like buses,there's always another one coming
Wakanyugi
#2460 Posted : Friday, April 13, 2018 2:14:05 PM
Rank: Veteran


Joined: 7/3/2007
Posts: 1,634
Ericsson wrote:
Wakanyugi wrote:
KulaRaha wrote:
Sir invest wrote:
The CBK Gvr might be shown the door for colluding with banks/KBA to deny Individuals and SMEs credit in an aim to force a repeal #Interest rate capping Law!!!


The guy is academically clever, but very unwise and rash...bad bad decisions throughout his tenure so far...d'oh!


He is a terrible politician too. Bringing the evil duo - IMF and World Bank - to bat for him, re: interest rate cap, was just baaaad!

Kwani he did not live in Kenya during the dark days of Structural adjustment?


We took ourselves to IMF and World bank by mismanaging our finances/coffers.
Now we are requesting for help from them and it comes with conditions


Not quite.

We are going back because the government does not want to take the difficult calls, namely, fiscal discipline and the hard choices that go with it. Ultimately this is the only real solution to the interest rates issue and I suspect the market and other forces will eventually force Uhuruto's hand. But this is a can that Uhuru would rather kick further down the road and hence the Caps repeal promise. I suspect Ruto will inherit this skunk, among many others.

Meanwhile the, poor innocent Banks (safi kama pamba) are going to take a PR hit once the debate in parliament and the public arena gets going.
"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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