Can members of this forum desist from quoting religion everytime they fail in an argument? It's actually rather not kosher.

A bank is not a sacco. A sacco is for members who are doing the same activity. In other places it is called community banking and for your information these are the banks that are least affected by the economic downturn.

However,unlike Equity,they do not insist on people bringing other people to guarantee the loan. They do not attach one's property until after they have gone to court and convinced the bank of the need to do the same.

Community banks all over the world do not tell you to come with guarantors. You are basically 'judged by the content of your character'. Not by whom you know or do not know just to make shareholders happy.

Whether you like it or not,you cannot find any logicial or even moral (since you bring up God all the time) for illegally attaching someone elses property when the main borrower defaults without warning.

Just because a Kenyan bank does it,does not make it right. It is wrong in the eyes of Commonwealth law,and even the eyes of whoever is your moral compass.

In short,it is a practise that is going nowhere in the long run. and if any bank uses that as a template of operation,it is doomed to fail in the future too when it lacks people who are willing to be guarantors.

My evidence is the fact that even those who have replied on this post have no intention of becoming guarantors. You also have KREP to tell you about banks that use other people solely as collateral.

What will happen is that a secondary illegal market will appear where people charge to become guarantors. Something tells me that this is already happening.

mukiha,no problem. Apology accepted.

I actually like Equity since they opened up the doors for many. However,this guarantee thing is something that I am fully convinced will lead to the grave.

I remember sometime back when some africans where told to sign here for a peace deal and instead made land contracts with white people.

Having a contract does not make it right or even legal for that matter. It is called hoodwinking the public and there is always a backlash. I am sure that when someone will take this issue to court,they may actually have a chance.

If it smells rotten it probably is rotten and something tells me that soon and very soon,this will be challenged in court seeing that it is illegal all over the world.

Even the dreaded IRS has to go to court to attach one's sole source of income. They just can't come up one morning and take your whole salary because you signed a paper.

If this is a law that is accepted in Kenya it is immoral. Laws that go against common decency are all being removed and going the way of the dinosaur. I have faith in Kenya and believe if such a law exists where a court can allow someone's children to go hungry just to make equity happy,it will go too.

I have friends by the way. lol

@nanfor:
There is nowhere in the world where a contact can or has ever been invalidated by a court because the person who signed it did not read it.

However,if the contract is written in an intelligible language (i.e.,one that nobody can understand),the one can have a case....you file for interpretation of the clause and if the court is also not able to understand it,then it can be invalidated

This happened in New York some years ago when a guy challenged a clause in a credit card contract...the judge was not able to interpret the clause (which was a 300-word sentence!!!) and therefore declared it invalid..... This formed the basis of the so-called 'Plain-English' law now common in many state in the US and some countries in the world.

Nonetheless,if the clause is clear,then you must abide by it. It is no defense to claim that you did not read it. Though you can claim that you were not given the opportunity to read and were forced to sign (e.g.,bus companies allow you in their bus and give you a receipt that refers to company's terms and conditions...but those terms are not posted in the bus!).

All the same,we have to be very careful because if we say it is OK to default on a contract and then claim we did not read it,we shall have declared that contracts are meaningless!

I am still waiting for your suggestion as to how the bank can guarantee itself that the loan will be paid.

Nanfor.....so many words brother/sister!!!

I agree with you that the interest rates in Kenya are high!!!

I disagrre with you on the issue of guarantors coz a bank must place mechanisms on how to recoup their loans........no short cuts here!!!!


Make money.....then you will enjoy all the fine things in life!!!

Again Mukiha,you are trying to misinform the public. Or maybe you are the one who is misinformed.
The credit system in the USA works just fine for the rich and the poor. A poor person in the slum can get a loan at a lower rate than a rich person as long as he is asking for what he can afford to repay and has a history of repaying other loans advanced.
That is the reason many Kenyans have made it there despite their family backgrounds in Kenya.
This credit crunch you are trying to infer was not about credit ratings but the practice of some mortgage companies offering loans to people who could not afford it. Please do not try to confuse the two issues.
In fact I hazard to say that giving someone who earns 20k ksh a month a loan where he repays more than 40% of his salary is the very reason of the credit crunch in the west so don't think you are safe or unique.
Fixed rate mortgages are the way to go. Mortgage companies have been feeding people on this cacophony of adjustable rates with the idea that interest rates will go down. They never do and if there is a Kenyan who has experienced his interest rates falling on a loan,please do share.
About Islamic banking making loses,your argument goes to prove that you are a shareholder again. I am an investor,whether my bank is making a profit or not is not my business. I want to borrow and make a profit with what I have borrowed. what good does it do me if Equity is making 90% profit and I am hungry in my house?
For those who are interested and not clouded with the name Islamic,take a walk to Gulf and First community,you might save your family the pain of losing your house to a legal shylock.
@McReggea,
I agree as a former banker that a bank must place mechanisms to protect their funds. What I disagree with is this notion that 4 guarantors is the way to go. My view is that is it is a tool being used by this bank to stop lending.
When a bank is having problems with cash flows,the first thing they do is start issuing stricter rules on borrowing with the notion that they are protecting themselves. It is always a lie as banks will lend to all and sundry as evidenced with their behavior just before the ATM's started having problems. Just conveniently at the same time when doing a split.
I know for a fact Mukiha that Equity has advised its managers to reduce lending and deny a loan application for the flimsiest of reasons.