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Law Capping interest rates
Rank: Elder Joined: 11/5/2010 Posts: 2,459
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wukan wrote:tom_boy wrote:Obi 1 Kanobi wrote:bird_man wrote:So loans at 13% and savings interest at 9%?
If you were James Mwangi, would you deploy your 10 Billion capital to earn 4%pa? I have not even included cost of production. What's your problem here, I don't get it. As things stand now, banks are making supernormal profits, no other industry is even close to competing (save for Safaricom). Mark you banks don't even require much in terms of fixed capital outlay, they simply just pay wages (to non specialised employment pools), no other longterm investment is needed, compare this with say KQ that needs to buy 15B aeroplanes, or a cement company that needs to set up capital intensive factory or even a power generation plants that cost 100Bn in initial capital outlay. They have it easy, they should be quietely enjoying their loot and hoping new entrants don't join and share their pie? I am just loving this. I remember being castigated here for supporting rate cap using river road economic theory. I just love the proposal that 20% of lending be channelled to sme's and micro businesses. Try find out how Zambia is fairing on after their experiment. You cannot repeal the laws of economics  Anyway we have discussed this topic ad nauseam.... wacha katambe bora uhai  Its really heart-breaking following some of these arguments. The rate capping experiment has run for two full years. Its been a total flop. But the ruling class has just found a new bogeyman, greedy banks. Not the governments insatiable appetite and reckless spending. And it is nauseating when the cheering squad includes folks from this forum. That someone on this forum could actually believe that MPs refused to repeal the rate capping out of altruism is beyond belief. The same MPs increased the mandatory housing fund contribution from the 0.5% recommended to 1.5%. Never mind that unlike NSSF or NHIF, the contributor to this new cash cow has no benefit. The same MPs passed the 16% VAT on fuel. But they are so caring for the common man that they refused to remove the rate cap on interest rates.
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Rank: Elder Joined: 6/23/2009 Posts: 14,213 Location: nairobi
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FRM2011 wrote:wukan wrote:tom_boy wrote:Obi 1 Kanobi wrote:bird_man wrote:So loans at 13% and savings interest at 9%?
If you were James Mwangi, would you deploy your 10 Billion capital to earn 4%pa? I have not even included cost of production. What's your problem here, I don't get it. As things stand now, banks are making supernormal profits, no other industry is even close to competing (save for Safaricom). Mark you banks don't even require much in terms of fixed capital outlay, they simply just pay wages (to non specialised employment pools), no other longterm investment is needed, compare this with say KQ that needs to buy 15B aeroplanes, or a cement company that needs to set up capital intensive factory or even a power generation plants that cost 100Bn in initial capital outlay. They have it easy, they should be quietely enjoying their loot and hoping new entrants don't join and share their pie? I am just loving this. I remember being castigated here for supporting rate cap using river road economic theory. I just love the proposal that 20% of lending be channelled to sme's and micro businesses. Try find out how Zambia is fairing on after their experiment. You cannot repeal the laws of economics Anyway we have discussed this topic ad nauseam.... wacha katambe bora uhai Its really heart-breaking following some of these arguments. The rate capping experiment has run for two full years. Its been a total flop. But the ruling class has just found a new bogeyman, greedy banks. Not the governments insatiable appetite and reckless spending. And it is nauseating when the cheering squad includes folks from this forum. That someone on this forum could actually believe that MPs refused to repeal the rate capping out of altruism is beyond belief. The same MPs increased the mandatory housing fund contribution from the 0.5% recommended to 1.5%. Never mind that unlike NSSF or NHIF, the contributor to this new cash cow has no benefit. The same MPs passed the 16% VAT on fuel. But they are so caring for the common man that they refused to remove the rate cap on interest rates. You do know about quorum in parliament.. The VAT bill was passed with minimal numbers of the majority party as the same was state sponsored.. The 1.5% housing thing will never see light of day.. Meanwhile, assist in defining total flop of the rate cap
KQ ABP 4.26
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Rank: Member Joined: 10/6/2009 Posts: 587
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FRM2011 wrote:wukan wrote:tom_boy wrote:Obi 1 Kanobi wrote:bird_man wrote:So loans at 13% and savings interest at 9%?
If you were James Mwangi, would you deploy your 10 Billion capital to earn 4%pa? I have not even included cost of production. What's your problem here, I don't get it. As things stand now, banks are making supernormal profits, no other industry is even close to competing (save for Safaricom). Mark you banks don't even require much in terms of fixed capital outlay, they simply just pay wages (to non specialised employment pools), no other longterm investment is needed, compare this with say KQ that needs to buy 15B aeroplanes, or a cement company that needs to set up capital intensive factory or even a power generation plants that cost 100Bn in initial capital outlay. They have it easy, they should be quietely enjoying their loot and hoping new entrants don't join and share their pie? I am just loving this. I remember being castigated here for supporting rate cap using river road economic theory. I just love the proposal that 20% of lending be channelled to sme's and micro businesses. Try find out how Zambia is fairing on after their experiment. You cannot repeal the laws of economics Anyway we have discussed this topic ad nauseam.... wacha katambe bora uhai Its really heart-breaking following some of these arguments. The rate capping experiment has run for two full years. Its been a total flop. But the ruling class has just found a new bogeyman, greedy banks. Not the governments insatiable appetite and reckless spending. And it is nauseating when the cheering squad includes folks from this forum. That someone on this forum could actually believe that MPs refused to repeal the rate capping out of altruism is beyond belief. The same MPs increased the mandatory housing fund contribution from the 0.5% recommended to 1.5%. Never mind that unlike NSSF or NHIF, the contributor to this new cash cow has no benefit. The same MPs passed the 16% VAT on fuel. But they are so caring for the common man that they refused to remove the rate cap on interest rates. @FRM2011, I borrowed some money to accomplish a task three years ago and I have been repaying the loan at close to kshs 110k per month. Before the rate cap the monthly repayment stood at kshs 130k. So you want me to go to a rooftop pissing metal, curse all and sundry and cry out loudly because the rates cap law is not being repealed??? I am not knowledgeable in the financial fields but I know when I am really oppressed. On this one from a Wanjiku perspective, whether the mpigs are caring or not, neenda ukawahubirie watu wenu hiyo injiri...the rate cap has so far saved me a cool kshs 1/4 million!!!
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Rank: Elder Joined: 12/4/2009 Posts: 10,804 Location: NAIROBI
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Baratang wrote:FRM2011 wrote:wukan wrote:tom_boy wrote:Obi 1 Kanobi wrote:bird_man wrote:So loans at 13% and savings interest at 9%?
If you were James Mwangi, would you deploy your 10 Billion capital to earn 4%pa? I have not even included cost of production. What's your problem here, I don't get it. As things stand now, banks are making supernormal profits, no other industry is even close to competing (save for Safaricom). Mark you banks don't even require much in terms of fixed capital outlay, they simply just pay wages (to non specialised employment pools), no other longterm investment is needed, compare this with say KQ that needs to buy 15B aeroplanes, or a cement company that needs to set up capital intensive factory or even a power generation plants that cost 100Bn in initial capital outlay. They have it easy, they should be quietely enjoying their loot and hoping new entrants don't join and share their pie? I am just loving this. I remember being castigated here for supporting rate cap using river road economic theory. I just love the proposal that 20% of lending be channelled to sme's and micro businesses. Try find out how Zambia is fairing on after their experiment. You cannot repeal the laws of economics Anyway we have discussed this topic ad nauseam.... wacha katambe bora uhai Its really heart-breaking following some of these arguments. The rate capping experiment has run for two full years. Its been a total flop. But the ruling class has just found a new bogeyman, greedy banks. Not the governments insatiable appetite and reckless spending. And it is nauseating when the cheering squad includes folks from this forum. That someone on this forum could actually believe that MPs refused to repeal the rate capping out of altruism is beyond belief. The same MPs increased the mandatory housing fund contribution from the 0.5% recommended to 1.5%. Never mind that unlike NSSF or NHIF, the contributor to this new cash cow has no benefit. The same MPs passed the 16% VAT on fuel. But they are so caring for the common man that they refused to remove the rate cap on interest rates. @FRM2011, I borrowed some money to accomplish a task three years ago and I have been repaying the loan at close to kshs 110k per month. Before the rate cap the monthly repayment stood at kshs 130k. So you want me to go to a rooftop pissing metal, curse all and sundry and cry out loudly because the rates cap law is not being repealed??? I am not knowledgeable in the financial fields but I know when I am really oppressed. On this one from a Wanjiku perspective, whether the mpigs are caring or not, neenda ukawahubirie watu wenu hiyo injiri...the rate cap has so far saved me a cool kshs 1/4 million!!! A law should be passed to limit how much GoK can borrow from banks per annum. With depressed GoK borrowing interest rates charged by banks will automatically fall. Tactic that was used by Pres.Kibaki+Minister Mwiraria+CBK Gov.Andrew Mullei in 2003/4 Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Elder Joined: 3/19/2010 Posts: 3,505 Location: Uganda
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Baratang wrote:FRM2011 wrote:wukan wrote:tom_boy wrote:Obi 1 Kanobi wrote:bird_man wrote:So loans at 13% and savings interest at 9%?
If you were James Mwangi, would you deploy your 10 Billion capital to earn 4%pa? I have not even included cost of production. What's your problem here, I don't get it. As things stand now, banks are making supernormal profits, no other industry is even close to competing (save for Safaricom). Mark you banks don't even require much in terms of fixed capital outlay, they simply just pay wages (to non specialised employment pools), no other longterm investment is needed, compare this with say KQ that needs to buy 15B aeroplanes, or a cement company that needs to set up capital intensive factory or even a power generation plants that cost 100Bn in initial capital outlay. They have it easy, they should be quietely enjoying their loot and hoping new entrants don't join and share their pie? I am just loving this. I remember being castigated here for supporting rate cap using river road economic theory. I just love the proposal that 20% of lending be channelled to sme's and micro businesses. Try find out how Zambia is fairing on after their experiment. You cannot repeal the laws of economics Anyway we have discussed this topic ad nauseam.... wacha katambe bora uhai Its really heart-breaking following some of these arguments. The rate capping experiment has run for two full years. Its been a total flop. But the ruling class has just found a new bogeyman, greedy banks. Not the governments insatiable appetite and reckless spending. And it is nauseating when the cheering squad includes folks from this forum. That someone on this forum could actually believe that MPs refused to repeal the rate capping out of altruism is beyond belief. The same MPs increased the mandatory housing fund contribution from the 0.5% recommended to 1.5%. Never mind that unlike NSSF or NHIF, the contributor to this new cash cow has no benefit. The same MPs passed the 16% VAT on fuel. But they are so caring for the common man that they refused to remove the rate cap on interest rates. @FRM2011, I borrowed some money to accomplish a task three years ago and I have been repaying the loan at close to kshs 110k per month. Before the rate cap the monthly repayment stood at kshs 130k. So you want me to go to a rooftop pissing metal, curse all and sundry and cry out loudly because the rates cap law is not being repealed??? I am not knowledgeable in the financial fields but I know when I am really oppressed. On this one from a Wanjiku perspective, whether the mpigs are caring or not, neenda ukawahubirie watu wenu hiyo injiri...the rate cap has so far saved me a cool kshs 1/4 million!!! was able to secure a substantial amount of loan in March this year to finalize some pending projects without much sweat ,do you want me to cry that the capping is not going .to hell with abnormal profits .its wanjikus time to eat. .one man poison another man's food punda amecheka
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Rank: Veteran Joined: 4/23/2014 Posts: 931
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FRM2011 wrote:wukan wrote:tom_boy wrote:Obi 1 Kanobi wrote:bird_man wrote:So loans at 13% and savings interest at 9%?
If you were James Mwangi, would you deploy your 10 Billion capital to earn 4%pa? I have not even included cost of production. What's your problem here, I don't get it. As things stand now, banks are making supernormal profits, no other industry is even close to competing (save for Safaricom). Mark you banks don't even require much in terms of fixed capital outlay, they simply just pay wages (to non specialised employment pools), no other longterm investment is needed, compare this with say KQ that needs to buy 15B aeroplanes, or a cement company that needs to set up capital intensive factory or even a power generation plants that cost 100Bn in initial capital outlay. They have it easy, they should be quietely enjoying their loot and hoping new entrants don't join and share their pie? I am just loving this. I remember being castigated here for supporting rate cap using river road economic theory. I just love the proposal that 20% of lending be channelled to sme's and micro businesses. Try find out how Zambia is fairing on after their experiment. You cannot repeal the laws of economics Anyway we have discussed this topic ad nauseam.... wacha katambe bora uhai Its really heart-breaking following some of these arguments. The rate capping experiment has run for two full years. Its been a total flop. But the ruling class has just found a new bogeyman, greedy banks. Not the governments insatiable appetite and reckless spending. And it is nauseating when the cheering squad includes folks from this forum. That someone on this forum could actually believe that MPs refused to repeal the rate capping out of altruism is beyond belief. The same MPs increased the mandatory housing fund contribution from the 0.5% recommended to 1.5%. Never mind that unlike NSSF or NHIF, the contributor to this new cash cow has no benefit. The same MPs passed the 16% VAT on fuel. But they are so caring for the common man that they refused to remove the rate cap on interest rates. I'm sorry for you're sadness, you'll get over it. Just give it some time. “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
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Rank: Veteran Joined: 11/2/2006 Posts: 1,206 Location: Nairobi
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bird_man wrote:So loans at 13% and savings interest at 9%?
If you were James Mwangi, would you deploy your 10 Billion capital to earn 4%pa? I have not even included cost of production. What this scenario leads to is: 1.Banks move from retail (mwananchi) & SME banking to investment banking.They will specialise is bonds,bills,papers,syndicated loans etc. 2.They will move to micro lending...every bank will have an Mshwari type product coz you can flip the capital many times over in a year. The two above cannot help Mwananchi develop.SMEs are totally left out. You are lucky if payslipped and working for a big company...else... Formally employed people often live their employers' dream & forget about their own.
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Rank: Elder Joined: 7/23/2008 Posts: 3,017
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FRM2011 wrote:wukan wrote:tom_boy wrote:Obi 1 Kanobi wrote:bird_man wrote:So loans at 13% and savings interest at 9%?
If you were James Mwangi, would you deploy your 10 Billion capital to earn 4%pa? I have not even included cost of production. What's your problem here, I don't get it. As things stand now, banks are making supernormal profits, no other industry is even close to competing (save for Safaricom). Mark you banks don't even require much in terms of fixed capital outlay, they simply just pay wages (to non specialised employment pools), no other longterm investment is needed, compare this with say KQ that needs to buy 15B aeroplanes, or a cement company that needs to set up capital intensive factory or even a power generation plants that cost 100Bn in initial capital outlay. They have it easy, they should be quietely enjoying their loot and hoping new entrants don't join and share their pie? I am just loving this. I remember being castigated here for supporting rate cap using river road economic theory. I just love the proposal that 20% of lending be channelled to sme's and micro businesses. Try find out how Zambia is fairing on after their experiment. You cannot repeal the laws of economics Anyway we have discussed this topic ad nauseam.... wacha katambe bora uhai Its really heart-breaking following some of these arguments. The rate capping experiment has run for two full years. Its been a total flop. But the ruling class has just found a new bogeyman, greedy banks. Not the governments insatiable appetite and reckless spending. And it is nauseating when the cheering squad includes folks from this forum. That someone on this forum could actually believe that MPs refused to repeal the rate capping out of altruism is beyond belief. The same MPs increased the mandatory housing fund contribution from the 0.5% recommended to 1.5%. Never mind that unlike NSSF or NHIF, the contributor to this new cash cow has no benefit. The same MPs passed the 16% VAT on fuel. But they are so caring for the common man that they refused to remove the rate cap on interest rates. Whats heartbreaking is your mixing of issues and not even giving this debate a credible point of view from your perspective. Lets evaluate the outcome for the players from a layman's perspective: 1. Wanjiku has gained - able to save interest costs as has been attested to by many here 2. Banks have gained - still making record breaking billions in profits 3. Wanjiku lost on access to risky loans - difficulty in accessing loans where risk is high, but as a result primarily of excessive govt borrowing in the domestic market which has nothing to do with the rate cap. The proposed amendment in parliament wants to cure this. So @Frm2011, who is losing out again as a result of the rate cap "The purpose of bureaucracy is to compensate for incompetence and lack of discipline." James Collins
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Rank: Elder Joined: 7/23/2008 Posts: 3,017
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newfarer wrote:Baratang wrote:FRM2011 wrote:wukan wrote:tom_boy wrote:Obi 1 Kanobi wrote:bird_man wrote:So loans at 13% and savings interest at 9%?
If you were James Mwangi, would you deploy your 10 Billion capital to earn 4%pa? I have not even included cost of production. What's your problem here, I don't get it. As things stand now, banks are making supernormal profits, no other industry is even close to competing (save for Safaricom). Mark you banks don't even require much in terms of fixed capital outlay, they simply just pay wages (to non specialised employment pools), no other longterm investment is needed, compare this with say KQ that needs to buy 15B aeroplanes, or a cement company that needs to set up capital intensive factory or even a power generation plants that cost 100Bn in initial capital outlay. They have it easy, they should be quietely enjoying their loot and hoping new entrants don't join and share their pie? I am just loving this. I remember being castigated here for supporting rate cap using river road economic theory. I just love the proposal that 20% of lending be channelled to sme's and micro businesses. Try find out how Zambia is fairing on after their experiment. You cannot repeal the laws of economics Anyway we have discussed this topic ad nauseam.... wacha katambe bora uhai Its really heart-breaking following some of these arguments. The rate capping experiment has run for two full years. Its been a total flop. But the ruling class has just found a new bogeyman, greedy banks. Not the governments insatiable appetite and reckless spending. And it is nauseating when the cheering squad includes folks from this forum. That someone on this forum could actually believe that MPs refused to repeal the rate capping out of altruism is beyond belief. The same MPs increased the mandatory housing fund contribution from the 0.5% recommended to 1.5%. Never mind that unlike NSSF or NHIF, the contributor to this new cash cow has no benefit. The same MPs passed the 16% VAT on fuel. But they are so caring for the common man that they refused to remove the rate cap on interest rates. @FRM2011, I borrowed some money to accomplish a task three years ago and I have been repaying the loan at close to kshs 110k per month. Before the rate cap the monthly repayment stood at kshs 130k. So you want me to go to a rooftop pissing metal, curse all and sundry and cry out loudly because the rates cap law is not being repealed??? I am not knowledgeable in the financial fields but I know when I am really oppressed. On this one from a Wanjiku perspective, whether the mpigs are caring or not, neenda ukawahubirie watu wenu hiyo injiri...the rate cap has so far saved me a cool kshs 1/4 million!!! was able to secure a substantial amount of loan in March this year to finalize some pending projects without much sweat ,do you want me to cry that the capping is not going .to hell with abnormal profits .its wanjikus time to eat. .one man poison another man's food Wanjiku and SME's just need to be educated on loans application process, the era of walking into a bank with some logbook or title deed is now long gone. Try approaching a bank with a well laid out business plan demonstrating ability to pay and a strong credit history and for sure regardless of size of your business, you will walk out with the loan you wanted. IFRS 9 has put alot of emphasis on provisioning for bad and doubtfull debt and this will impact access to high risk loans from banks even more than the rate cap. "The purpose of bureaucracy is to compensate for incompetence and lack of discipline." James Collins
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Rank: Veteran Joined: 9/18/2014 Posts: 1,127
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Obi 1 Kanobi wrote:FRM2011 wrote:wukan wrote:tom_boy wrote:Obi 1 Kanobi wrote:bird_man wrote:So loans at 13% and savings interest at 9%?
If you were James Mwangi, would you deploy your 10 Billion capital to earn 4%pa? I have not even included cost of production. What's your problem here, I don't get it. As things stand now, banks are making supernormal profits, no other industry is even close to competing (save for Safaricom). Mark you banks don't even require much in terms of fixed capital outlay, they simply just pay wages (to non specialised employment pools), no other longterm investment is needed, compare this with say KQ that needs to buy 15B aeroplanes, or a cement company that needs to set up capital intensive factory or even a power generation plants that cost 100Bn in initial capital outlay. They have it easy, they should be quietely enjoying their loot and hoping new entrants don't join and share their pie? I am just loving this. I remember being castigated here for supporting rate cap using river road economic theory. I just love the proposal that 20% of lending be channelled to sme's and micro businesses. Try find out how Zambia is fairing on after their experiment. You cannot repeal the laws of economics Anyway we have discussed this topic ad nauseam.... wacha katambe bora uhai Its really heart-breaking following some of these arguments. The rate capping experiment has run for two full years. Its been a total flop. But the ruling class has just found a new bogeyman, greedy banks. Not the governments insatiable appetite and reckless spending. And it is nauseating when the cheering squad includes folks from this forum. That someone on this forum could actually believe that MPs refused to repeal the rate capping out of altruism is beyond belief. The same MPs increased the mandatory housing fund contribution from the 0.5% recommended to 1.5%. Never mind that unlike NSSF or NHIF, the contributor to this new cash cow has no benefit. The same MPs passed the 16% VAT on fuel. But they are so caring for the common man that they refused to remove the rate cap on interest rates. Whats heartbreaking is your mixing of issues and not even giving this debate a credible point of view from your perspective. Lets evaluate the outcome for the players from a layman's perspective: 1. Wanjiku has gained - able to save interest costs as has been attested to by many here 2. Banks have gained - still making record breaking billions in profits 3. Wanjiku lost on access to risky loans - difficulty in accessing loans where risk is high, but as a result primarily of excessive govt borrowing in the domestic market which has nothing to do with the rate cap. The proposed amendment in parliament wants to cure this. So @Frm2011, who is losing out again as a result of the rate cap Let me try to simplify this for you: 1. What was the weighted average cost of money (interest rates) from all sources (banks, shylocks, saccos, friends/family, microfinance institutions, fintech et al) before the rate caps? 2. What is the weighted average cost of money (from all sources as above) now under the rate cap regime? 3. Has the cost increased or decreased and what do you suppose is happening to SMEs, Wanjiku and the economy (intended beneficiaries from the cap laws) at large? The main purpose of the stock market is to make fools of as many people as possible.
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