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Law Capping interest rates
Rank: Elder Joined: 7/22/2009 Posts: 7,451
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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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Rank: Elder Joined: 7/22/2009 Posts: 7,451
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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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Rank: Chief Joined: 1/3/2007 Posts: 18,056 Location: Nairobi
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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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Rank: Elder Joined: 7/22/2009 Posts: 7,451
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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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Rank: Elder Joined: 7/21/2010 Posts: 6,175 Location: nairobi
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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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Rank: Chief Joined: 1/3/2007 Posts: 18,056 Location: Nairobi
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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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Rank: Elder Joined: 6/23/2009 Posts: 13,475 Location: nairobi
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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
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: 4/30/2010 Posts: 1,635
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Rank: Elder Joined: 12/4/2009 Posts: 10,639 Location: NAIROBI
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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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Rank: Elder Joined: 3/19/2010 Posts: 3,504 Location: Uganda
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“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,  now the new rate can go to 1001% who cares punda amecheka
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Rank: Elder Joined: 3/19/2010 Posts: 3,504 Location: Uganda
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Ericsson wrote: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 true and me too.sailing with the big fish sometimes can bring in good tidings punda amecheka
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Rank: Elder Joined: 12/4/2009 Posts: 10,639 Location: NAIROBI
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Banks will not reap immediately the law is repealed. It will take time Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Elder Joined: 12/7/2012 Posts: 11,901
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Ericsson wrote:Banks will not reap immediately the law is repealed. It will take time It will ease the mobile loan pressure. 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: 7/22/2009 Posts: 7,451
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newfarer wrote:“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, now the new rate can go to 1001% who cares This is just a proposal. Not sure if Speaker Muturi will even allow it. You know who he will have to consult first... 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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Rank: Member Joined: 5/2/2018 Posts: 267
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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 Of course, what did we expect: after the NIC-CBA merger; it's time for the investment to make money. Parte after parte Down we mash up the place Parte after parte Down we mash up the place Parte after parte Down we mash up the place Mash up the place Big Trill on the beats Mash up the place
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Rank: Elder Joined: 7/21/2010 Posts: 6,175 Location: nairobi
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Even rallying of bank stocks is economy recovery..this vindicates the president the caps were hurting the economy.it's the bank stocks which dipped the market most "Don't let the fear of losing be greater than the excitement of winning."
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Rank: Member Joined: 5/2/2018 Posts: 267
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mlennyma wrote:Even rallying of bank stocks is economy recovery..this vindicates the president the caps were hurting the economy.it's the bank stocks which dipped the market most Serious bank stocks are on fire today!!
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Rank: Elder Joined: 3/19/2010 Posts: 3,504 Location: Uganda
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MaichBlack wrote:newfarer wrote:“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, now the new rate can go to 1001% who cares This is just a proposal. Not sure if Speaker Muturi will even allow it. You know who he will have to consult first... what happens if he doesn't allow it? with the mpigs neck high in debts,won't there be great resistance. I would reach malice and greed if Uhuru fails to agree with the amendment given that even the banks proposed this. punda amecheka
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Rank: Elder Joined: 7/21/2010 Posts: 6,175 Location: nairobi
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Superprime1 wrote:mlennyma wrote:Even rallying of bank stocks is economy recovery..this vindicates the president the caps were hurting the economy.it's the bank stocks which dipped the market most Serious bank stocks are on fire today!! it's darkest before dawn...if Q3 is positive then Christmas must be arriving earlier "Don't let the fear of losing be greater than the excitement of winning."
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Rank: Veteran Joined: 8/10/2014 Posts: 955 Location: Kenya
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They should get rid of the trading limits just for today on the banking stocks
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