wazua Sun, Dec 22, 2024
Welcome Guest Search | Active Topics | Log In | Register

151 Pages«<23456>»
Law Capping interest rates
mlennyma
#61 Posted : Friday, July 29, 2016 9:56:47 AM
Rank: Elder


Joined: 7/21/2010
Posts: 6,183
Location: nairobi
Obi 1 Kanobi wrote:
Swenani wrote:
This is not about uhunye protecting his interests in CBA but it's common sense......It is a bad idea to cap interest rates-they are beter ways to reduce the rates if the govt is keen to.

Which are this other methods everyone keeps talking about and why has Treasury/CBK not applied them to the sector.

It is this failure by the CBK/Treasury to tame rates that has now forced the legislature to come up with this law

By the way interest rates caps of one form or another do exist in South Africa, India, Bangladesh.

In the US, France and even UK, caps do exist to check Usurious and predatory lenders. Our entire financial system is predatory and need to be checked through such caps.

this examples you are comparing with a third world economy makes you look a jocker,whats the population's financial ability?like india whats the country's population?billion.....in kenya 40million over 40 banks and Saccos where three quarters of the population is very poor
"Don't let the fear of losing be greater than the excitement of winning."
penkon
#62 Posted : Friday, July 29, 2016 9:57:14 AM
Rank: New-farer


Joined: 3/12/2014
Posts: 96
Obi 1 Kanobi wrote:
Swenani wrote:
This is not about uhunye protecting his interests in CBA but it's common sense......It is a bad idea to cap interest rates-they are beter ways to reduce the rates if the govt is keen to.

Which are this other methods everyone keeps talking about and why has Treasury/CBK not applied them to the sector.

It is this failure by the CBK/Treasury to tame rates that has now forced the legislature to come up with this law

By the way interest rates caps of one form or another do exist in South Africa, India, Bangladesh.

In the US, France and even UK, caps do exist to check Usurious and predatory lenders. Our entire financial system is predatory and need to be checked through such caps.

Applause Applause Applause Applause
wukan
#63 Posted : Friday, July 29, 2016 10:13:43 AM
Rank: Veteran


Joined: 11/13/2015
Posts: 1,590
Before we mess the credit market it's important to realize that the savings rate in kenya is only 13-15% of GDP which lower than the african average of 17%. An economy at our level of development should be doing around 25% of GDP. Asia countries were doing around 30% of GDP to take off economically.

Those who want interest rates controlled should be encouraged to save more for their projects instead of borrowing. If you must borrow it is willing buyer willing seller of credit. GoK is borrowing at 14% for 5 years shame on you if you think you can borrow my savings at 14.5%
mlennyma
#64 Posted : Friday, July 29, 2016 10:20:34 AM
Rank: Elder


Joined: 7/21/2010
Posts: 6,183
Location: nairobi
wukan wrote:
Before we mess the credit market it's important to realize that the savings rate in kenya is only 13-15% of GDP which lower than the african average of 17%. An economy at our level of development should be doing around 25% of GDP. Asia countries were doing around 30% of GDP to take off economically.

Those who want interest rates controlled should be encouraged to save more for their projects instead of borrowing. If you must borrow it is willing buyer willing seller of credit. GoK is borrowing at 14% for 5 years shame on you if you think you can borrow my savings at 14.5%

let people negotiate rates depending on their credit history /collateral and financial discipline
"Don't let the fear of losing be greater than the excitement of winning."
streetwise
#65 Posted : Friday, July 29, 2016 10:33:26 AM
Rank: Veteran


Joined: 6/23/2011
Posts: 1,740
Location: Nairobi
My take is that the banking industry has shown oligopolistic tendencies and despite all cries they don't listen. Since they are unable to make the decision to accept lower profits like their counter parts in the rest of the world, let’s do what is within our control , CAP the interest rates and then they can come to us with their proposals.

Offering a loan at 24% in is like robbery with violence.

So let’s throw the ball into the banks court and leave it there.

mlennyma
#66 Posted : Friday, July 29, 2016 10:51:16 AM
Rank: Elder


Joined: 7/21/2010
Posts: 6,183
Location: nairobi
streetwise wrote:
My take is that the banking industry has shown oligopolistic tendencies and despite all cries they don't listen. Since they are unable to make the decision to accept lower profits like their counter parts in the rest of the world, let’s do what is within our control , CAP the interest rates and then they can come to us with their proposals.

Offering a loan at 24% in is like robbery with violence.

So let’s throw the ball into the banks court and leave it there.


what people don't know is that banks offer lower interest on client's who have build a good credit history but you must start from that high point as a stranger
"Don't let the fear of losing be greater than the excitement of winning."
mlennyma
#67 Posted : Friday, July 29, 2016 10:55:18 AM
Rank: Elder


Joined: 7/21/2010
Posts: 6,183
Location: nairobi
This can be a raila policy, i will be shocked if it can still be uhuru's policy as well.
"Don't let the fear of losing be greater than the excitement of winning."
Wamunyota
#68 Posted : Friday, July 29, 2016 11:39:28 AM
Rank: Veteran


Joined: 6/23/2014
Posts: 1,652
Before we look at the law or economic argument of this proposal, the Kenyan culture unfortunately disregards payment of debt. Majority of Kenyans have no intention of paying debt even when they know they took the loan and the loan assisted them.
For instance how many Kenyans have paid their HELB loans including the middle class? This has lead to unorthodox means by HELB including threatening to withholding marriage certificates so that people can pay.
Look at how nag their tenants before they can give back their deposits.
This culture puts a premium to any lendor because of the cost of recovering money.
Kenya is a also generally a cash economy and therefore majority do not have credit history. The few who have a history the record is not very appealing.
Kenya is still a poor third world country with only a few who are financially stable. The majority middle class are not investing in assets but fassets which do not add any economic value.
Hutia Mundu!!
obiero
#69 Posted : Friday, July 29, 2016 11:44:06 AM
Rank: Elder


Joined: 6/23/2009
Posts: 13,515
Location: nairobi
Wamunyota wrote:
Before we look at the law or economic argument of this proposal, the Kenyan culture unfortunately disregards payment of debt. Majority of Kenyans have no intention of paying debt even when they know they took the loan and the loan assisted them.
For instance how many Kenyans have paid their HELB loans including the middle class? This has lead to unorthodox means by HELB including threatening to withholding marriage certificates so that people can pay.
Look at how nag their tenants before they can give back their deposits.
This culture puts a premium to any lendor because of the cost of recovering money.
Kenya is a also generally a cash economy and therefore majority do not have credit history. The few who have a history the record is not very appealing.
Kenya is still a poor third world country with only a few who are financially stable. The majority middle class are not investing in assets but fassets which do not add any economic value.

Amen.. Well written

HF 90,000 ABP 3.83; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
obiero
#70 Posted : Friday, July 29, 2016 11:46:04 AM
Rank: Elder


Joined: 6/23/2009
Posts: 13,515
Location: nairobi
Maybe we are missing the key point, which should be the question, can banks remain profitable if interest rates are capped?? I think they will survive, though mobile money will be hit hard since currently it goes for 72% per annum and people actually borrow at such rates willingly!!!

HF 90,000 ABP 3.83; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
Swenani
#71 Posted : Friday, July 29, 2016 11:53:00 AM
Rank: User


Joined: 8/15/2013
Posts: 13,237
Location: Vacuum
Obi 1 Kanobi wrote:
Swenani wrote:
This is not about uhunye protecting his interests in CBA but it's common sense......It is a bad idea to cap interest rates-they are beter ways to reduce the rates if the govt is keen to.

Which are this other methods everyone keeps talking about and why has Treasury/CBK not applied them to the sector.

It is this failure by the CBK/Treasury to tame rates that has now forced the legislature to come up with this law

By the way interest rates caps of one form or another do exist in South Africa, India, Bangladesh.

In the US, France and even UK, caps do exist to check Usurious and predatory lenders. Our entire financial system is predatory and need to be checked through such caps.


Let's agree on one thing,the banks are not reluctant to reduce rates but rather the CBK and Treasury are reluctant.
Compare this Kenyan rates with the countries you have quoted above which all contribute to the final interest rate quoted by banks
1. Central bank rate-10.5%
2.Interbank rate 6%
3. Discount window 16.5%
4. T-bill rate-7.9%-Imagine its risk free??
5. KBRR-8.90%
6.Inflation rate is 5.8%

The other ways for the govt to decrease the interest rate is
1. Reduce domestic borrowing or reduce the T-bill/bonds auction rate
2.CBK to reduce the KBRR, CBK rate, REPO and interbank rates coz it doesnt make sense for a bank to borrow expensively from the CBK and lend cheaply or lend cheaply to the public yet it can lend expensively to a risk free entity(GoK)

If Obiero did it, Who Am I?
Ngogoyo
#72 Posted : Friday, July 29, 2016 11:54:36 AM
Rank: Member


Joined: 6/22/2011
Posts: 561
Location: House
Pesa Nane wrote:


For me, am glad the discussion now has started and that all relevant bodies are now involved.

It's plain to anyone that the interest rates charged by banks are determined by the market but the market has been manipulated by the same banks. Its good for them to feel kenyans need better rates that will ensure banks make normal profits and that i make a profit after i borrow from the bank to expand my business. Country grows and i borrow more, employ more and contribute tax more.

With the current market forces the rates should be hovering at 18-20% not 21-15%
Ngogoyo
#73 Posted : Friday, July 29, 2016 12:08:41 PM
Rank: Member


Joined: 6/22/2011
Posts: 561
Location: House
mlennyma wrote:
streetwise wrote:
My take is that the banking industry has shown oligopolistic tendencies and despite all cries they don't listen. Since they are unable to make the decision to accept lower profits like their counter parts in the rest of the world, let’s do what is within our control , CAP the interest rates and then they can come to us with their proposals.

Offering a loan at 24% in is like robbery with violence.

So let’s throw the ball into the banks court and leave it there.


what people don't know is that banks offer lower interest on client's who have build a good credit history but you must start from that high point as a stranger


This doesn't happen for individual clients and SMEs. Happens for corporates or high net individuals.
Emerger
#74 Posted : Friday, July 29, 2016 12:09:00 PM
Rank: New-farer


Joined: 12/1/2014
Posts: 45
Location: Nairobi
Swenani wrote:
Obi 1 Kanobi wrote:
Swenani wrote:
This is not about uhunye protecting his interests in CBA but it's common sense......It is a bad idea to cap interest rates-they are beter ways to reduce the rates if the govt is keen to.

Which are this other methods everyone keeps talking about and why has Treasury/CBK not applied them to the sector.

It is this failure by the CBK/Treasury to tame rates that has now forced the legislature to come up with this law

By the way interest rates caps of one form or another do exist in South Africa, India, Bangladesh.

In the US, France and even UK, caps do exist to check Usurious and predatory lenders. Our entire financial system is predatory and need to be checked through such caps.


Let's agree on one thing,the banks are not reluctant to reduce rates but rather the CBK and Treasury are reluctant.
Compare this Kenyan rates with the countries you have quoted above which all contribute to the final interest rate quoted by banks
1. Central bank rate-10.5%
2.Interbank rate 6%
3. Discount window 16.5%
4. T-bill rate-7.9%-Imagine its risk free??
5. KBRR-8.90%
6.Inflation rate is 5.8%

The other ways for the govt to decrease the interest rate is
1. Reduce domestic borrowing or reduce the T-bill/bonds auction rate
2.CBK to reduce the KBRR, CBK rate, REPO and interbank rates coz it doesnt make sense for a bank to borrow expensively from the CBK and lend cheaply or lend cheaply to the public yet it can lend expensively to a risk free entity(GoK)



To compare Kenya with others nations without stating the basis of comparison as Mr Obi want to do will not give the right picture/analysis.
Let's discuss Kenya as it is.
The writing is on the wall, the rates are high period. Question is, How can they be brought down?
Sir Swenani rightly gives part reasons n ways this can be tackled.
The ever wazuans have & are giving reasons why it's high, its from the reasons that we can find the solutions.
The govt of the day is heavy on borrowing to fund the fiscal budget, so domestic borrowing seems not be slowing esp going to an election year. The tbill rates have are starting an upward trajectory, how then do you cap the rates for a lender?.
A bank (read financial institution) is merely an a fulcrum for an economy growth between the savers and borrowers (read enterprenuers). so its a willing seller willing buyer.
Pure millioneare(PM)
#75 Posted : Friday, July 29, 2016 12:46:36 PM
Rank: Member


Joined: 11/1/2008
Posts: 38
This is not the first time that Parliament has passed a bill to control interest rates. Regardless of what we say in this forum, the powerful bank lobbysists (similar to the Gun Lobby in the US) will prevail on Uhuru to once again reject the bill. Period.
Impunity
#76 Posted : Friday, July 29, 2016 1:14:31 PM
Rank: Elder


Joined: 3/2/2009
Posts: 26,328
Location: Masada
Coolbull wrote:
Aki bankers are liars. There is nothing like lending to a high risk borrower. Which bank in Kenya ever gives money to a borrower while doubting their ability to pay. In fact charging high interest is increasing chances of defaulting.

Unless we are talking about the vulture-nature of lenders who lend to persons who cant re-pay so that they can auction their property. That is now over.

1. Bankers are crying wolf like former TELPOSTA employees at the introduction of mobile phones.

2.The same happened with Michuki rules. So called analysts warned of increase in fares. That did not really happen. Bado kuna trip za 10bob.

3. This was the same cry regarding MPESA and Mshwari.

I wish somebody can do something about high land prices...despite being an agent. Even some wives (over)charge for landing....conditions wazimu wazimu.

Fact: Kenyans are over-charged for everything, including prayers in some churches.


Wazimu everywhere!
Even condominiums are very overcharged, Kes.180 bob for a pack of 3, if you spoil one during assembly then you reduce your chots to only 2.
We need several such bills.

Sad Sad Sad Sad
Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.

Impunity
#77 Posted : Friday, July 29, 2016 1:26:20 PM
Rank: Elder


Joined: 3/2/2009
Posts: 26,328
Location: Masada
Pure millioneare(PM) wrote:
This is not the first time that Parliament has passed a bill to control interest rates. Regardless of what we say in this forum, the powerful bank lobbysists (similar to the Gun Lobby in the US) will prevail on Uhuru to once again reject the bill. Period.


How many times can @Uhuru reject a bill under the current law? Is there a minimum after which the bill automatically becomes a law? like the referendum law.

If you have a rogue President surrounded with cartel bankers then that could be a very bad situation for @wanjiko.
d'oh!
Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.

penkon
#78 Posted : Friday, July 29, 2016 1:33:45 PM
Rank: New-farer


Joined: 3/12/2014
Posts: 96
Impunity wrote:
Pure millioneare(PM) wrote:
This is not the first time that Parliament has passed a bill to control interest rates. Regardless of what we say in this forum, the powerful bank lobbysists (similar to the Gun Lobby in the US) will prevail on Uhuru to once again reject the bill. Period.


How many times can @Uhuru reject a bill under the current law? Is there a minimum after which the bill automatically becomes a law? like the referendum law.

If you have a rogue President surrounded with cartel bankers then that could be a very bad situation for @wanjiko.
d'oh!

he will be adviced by DJ who somehow owns a bank
streetwise
#79 Posted : Friday, July 29, 2016 2:37:16 PM
Rank: Veteran


Joined: 6/23/2011
Posts: 1,740
Location: Nairobi
So we need to keep high interest rates to make the rich even richer.

The time has come for us commoners to say NO and NOOOOOO!!.

They take you money , pay you peanuts ( you don't check how risky they of course), then they loan your brother at almost 10 times.

This bounders on fraud

Impunity
#80 Posted : Friday, July 29, 2016 2:43:33 PM
Rank: Elder


Joined: 3/2/2009
Posts: 26,328
Location: Masada
streetwise wrote:
So we need to keep high interest rates to make the rich even richer.

The time has come for us commoners to say NO and NOOOOOO!!.

They take you money , pay you peanuts ( you don't check how risky they of course), then they loan your brother at almost 10 times.

This bounders on fraud



The savannah spring wave will come to pass!
Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.

Users browsing this topic
Guest (5)
151 Pages«<23456>»
Forum Jump  
You cannot post new topics in this forum.
You cannot reply to topics in this forum.
You cannot delete your posts in this forum.
You cannot edit your posts in this forum.
You cannot create polls in this forum.
You cannot vote in polls in this forum.

Copyright © 2024 Wazua.co.ke. All Rights Reserved.