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Law Capping interest rates
Rank: Elder Joined: 3/19/2010 Posts: 3,504 Location: Uganda
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enyands wrote:Wapi MaichBlack? Taking coolaids punda amecheka
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Rank: Elder Joined: 3/2/2009 Posts: 26,328 Location: Masada
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Swenani wrote:Impunity wrote:Swenani wrote:If the bank are going to lend at 14.5%(on reducing balance), then saccos should lend at 5%(on principal) for sacco borrowing/lending to make any economic sense. And my fixed depsit account must earn me minimum 7%pa (70% x 10.5) The Kenyan banks have found themselves between a rock and a hard-hot place. If they cant lend me at 14% then they must pay at rate that is half the bank rate...7%.  what has been the rate paid by your bank on your fixed deposit account? If you are not getting 10%, there must be something fundamentally wrong with you. ok Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.
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Rank: Elder Joined: 7/21/2010 Posts: 6,183 Location: nairobi
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you failed to act when you had the opportunity "Don't let the fear of losing be greater than the excitement of winning."
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Rank: Member Joined: 1/31/2007 Posts: 303
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Jon Jones wrote:This is how I expect the situation to unfold.
1. Equity, Family Bank, Co-op etc, who largely cater for Wanjiku will be the worst affected because they are technically in a riskier business. The quality of their customers is very bad i.e largely Wanjiku.
2. KCB, I&M, DTB etc that cater for the upper middle class and the affluent (for KCB it is institutions), they will be better positioned because their customers have a higher value and less risk.
Assuming two banks lend at 14.5%, Equity and I & M, I & M will have less to worry about considering the nature of its customers. This bill is a kick in the nuts of James Mwangi and Gideon Muriuki I beg to differ,banks that have a wide footprint and bank the ordinary mwananchi will have access to deposits at almost zero cost since they will be paying nothing for the small deposits in their customer accounts. Infact the banks that will have the lowest cost on their deposits will win the coming war. With the capping it means the battle for quality clients is on,it will all be about who can offer the lowest of the lowest interest rate to that bluechip customer.
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Rank: Member Joined: 1/31/2007 Posts: 303
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Rank: Elder Joined: 2/22/2009 Posts: 2,449 Location: Africa
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I bank With Equity Bank and my salo is processed through it. I should be having a fair credit rating since I have never defaulted on a loan. However the bank through Equitel still finds it fit to charge me interest of 26pc per annum on a loan. This is the predatory behaviour that has to stop
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Rank: Elder Joined: 4/22/2010 Posts: 11,522 Location: Nairobi
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moneydust wrote:Jon Jones wrote:This is how I expect the situation to unfold.
1. Equity, Family Bank, Co-op etc, who largely cater for Wanjiku will be the worst affected because they are technically in a riskier business. The quality of their customers is very bad i.e largely Wanjiku.
2. KCB, I&M, DTB etc that cater for the upper middle class and the affluent (for KCB it is institutions), they will be better positioned because their customers have a higher value and less risk.
Assuming two banks lend at 14.5%, Equity and I & M, I & M will have less to worry about considering the nature of its customers. This bill is a kick in the nuts of James Mwangi and Gideon Muriuki I beg to differ,banks that have a wide footprint and bank the ordinary mwananchi will have access to deposits at almost zero cost since they will be paying nothing for the small deposits in their customer accounts. Infact the banks that will have the lowest cost on their deposits will win the coming war. With the capping it means the battle for quality clients is on,it will all be about who can offer the lowest of the lowest interest rate to that bluechip customer. Who defaults more?Wanjiku or the big guys the likes of TSS? possunt quia posse videntur
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Rank: User Joined: 8/15/2013 Posts: 13,237 Location: Vacuum
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Shak wrote:I bank With Equity Bank and my salo is processed through it. I should be having a fair credit rating since I have never defaulted on a loan. However the bank through Equitel still finds it fit to charge me interest of 26pc per annum on a loan. This is the predatory behaviour that has to stop Your salary in not a security, you can borrow today from equitell knowing very well you have been fired and your salary wont be coming to equity anymore. Moreover, due to lack of information(comprehensive) by CRB's banks do not have complete information of the average borrowers like you hence the interest charged factors in the risky borrowers who will borrow at the same rate like you but default. If Obiero did it, Who Am I?
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Rank: Elder Joined: 7/21/2010 Posts: 6,183 Location: nairobi
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Shak wrote:I bank With Equity Bank and my salo is processed through it. I should be having a fair credit rating since I have never defaulted on a loan. However the bank through Equitel still finds it fit to charge me interest of 26pc per annum on a loan. This is the predatory behaviour that has to stop mobile loans are shylock in nature "Don't let the fear of losing be greater than the excitement of winning."
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Rank: Veteran Joined: 8/25/2012 Posts: 1,826
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I don't get this thing about banks not lending to risky individuals, what has that got to do with the level of interest rates, I thought increasing the rates for risky individuals makes it even more risky that they will default, ama how does it work, is there a trend where risky individuals default like midway thus having a higher rate will ensure they will have finished paying up loaned amount or something.
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Rank: Elder Joined: 4/22/2010 Posts: 11,522 Location: Nairobi
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Swenani wrote:Shak wrote:I bank With Equity Bank and my salo is processed through it. I should be having a fair credit rating since I have never defaulted on a loan. However the bank through Equitel still finds it fit to charge me interest of 26pc per annum on a loan. This is the predatory behaviour that has to stop Your salary in not a security, you can borrow today from equitell knowing very well you have been fired and your salary wont be coming to equity anymore. Moreover, due to lack of information(comprehensive) by CRB's banks do not have complete information of the average borrowers like you hence the interest charged factors in the risky borrowers who will borrow at the same rate like you but default. And that's why the method of credit rating/credit score should be strengthened...there are many unsalaried guys/bila payslip who move quite some cash in their accounts but are unable to access loans because they don't have a permanent job plus a payslip... possunt quia posse videntur
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Rank: Member Joined: 1/31/2007 Posts: 303
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maka wrote:moneydust wrote:Jon Jones wrote:This is how I expect the situation to unfold.
1. Equity, Family Bank, Co-op etc, who largely cater for Wanjiku will be the worst affected because they are technically in a riskier business. The quality of their customers is very bad i.e largely Wanjiku.
2. KCB, I&M, DTB etc that cater for the upper middle class and the affluent (for KCB it is institutions), they will be better positioned because their customers have a higher value and less risk.
Assuming two banks lend at 14.5%, Equity and I & M, I & M will have less to worry about considering the nature of its customers. This bill is a kick in the nuts of James Mwangi and Gideon Muriuki I beg to differ,banks that have a wide footprint and bank the ordinary mwananchi will have access to deposits at almost zero cost since they will be paying nothing for the small deposits in their customer accounts. Infact the banks that will have the lowest cost on their deposits will win the coming war. With the capping it means the battle for quality clients is on,it will all be about who can offer the lowest of the lowest interest rate to that bluechip customer. Who defaults more?Wanjiku or the big guys the likes of TSS? I wouldnt categorize TSS as bluechip,besides it is much easier to lend and collect from one big quality customer as opposed to thousands of wanjikus.
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Rank: Elder Joined: 2/22/2009 Posts: 2,449 Location: Africa
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mlennyma wrote:Shak wrote:I bank With Equity Bank and my salo is processed through it. I should be having a fair credit rating since I have never defaulted on a loan. However the bank through Equitel still finds it fit to charge me interest of 26pc per annum on a loan. This is the predatory behaviour that has to stop mobile loans are shylock in nature kabisa
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Rank: Elder Joined: 6/23/2009 Posts: 13,519 Location: nairobi
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Sufficiently Philanga....thropic wrote:Simba must bow down to THE 20s That is unlikely elder
HF 90,000 ABP 3.83; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Elder Joined: 7/21/2010 Posts: 6,183 Location: nairobi
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obiero wrote:Sufficiently Philanga....thropic wrote:Simba must bow down to THE 20s That is unlikely elder But the list of counters to avoid until things settle should have new candidates ,the stocks you can buy are shrinking day by day in the nse "Don't let the fear of losing be greater than the excitement of winning."
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Rank: Elder Joined: 2/22/2009 Posts: 2,449 Location: Africa
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sitaki.kujulikana wrote:I don't get this thing about banks not lending to risky individuals, what has that got to do with the level of interest rates, I thought increasing the rates for risky individuals makes it even more risky that they will default, ama how does it work, is there a trend where risky individuals default like midway thus having a higher rate will ensure they will have finished paying up loaned amount or something. It's just an excuse to exploit Wanjiku
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Rank: Elder Joined: 2/26/2012 Posts: 15,980
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sitaki.kujulikana wrote:I don't get this thing about banks not lending to risky individuals, what has that got to do with the level of interest rates, I thought increasing the rates for risky individuals makes it even more risky that they will default, ama how does it work, is there a trend where risky individuals default like midway thus having a higher rate will ensure they will have finished paying up loaned amount or something. High rates is "insurance". "There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
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Rank: Member Joined: 9/11/2015 Posts: 244 Location: Thika
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sitaki.kujulikana wrote:I don't get this thing about banks not lending to risky individuals, what has that got to do with the level of interest rates, I thought increasing the rates for risky individuals makes it even more risky that they will default, ama how does it work, is there a trend where risky individuals default like midway thus having a higher rate will ensure they will have finished paying up loaned amount or something. Ni kama kufungua bale pale muthurwa. Unauza nguo camera (zile poa) at a very high price to cover for zenye utauza kama fagia at 30 bob a piece to Nairobi peasants. Loan ya peasant mmoja akilipa na 25% inasimamia loans ya another peasant who defaults. Since men have learned to shoot without missing, I have learned to fly without perching
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Rank: Elder Joined: 7/22/2009 Posts: 7,455
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enyands wrote:Wapi MaichBlack? Ndiye huyu hapa!!! 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: 1/31/2007 Posts: 303
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Jon Jones wrote:sitaki.kujulikana wrote:I don't get this thing about banks not lending to risky individuals, what has that got to do with the level of interest rates, I thought increasing the rates for risky individuals makes it even more risky that they will default, ama how does it work, is there a trend where risky individuals default like midway thus having a higher rate will ensure they will have finished paying up loaned amount or something. Ni kama kufungua bale pale muthurwa. Unauza nguo camera (zile poa) at a very high price to cover for zenye utauza kama fagia at 30 bob a piece to Nairobi peasants. Loan ya peasant mmoja akilipa na 25% inasimamia loans ya another peasant who defaults. Hapo ndipo..you have hit the nail on the head.With the capping of interest rates a banks cannot afford to make mistakes.Expect banks to now demand for good quality collateral (the phenomenon of unsecured loan will be finished or go completely down) and be very choosy on who to lend to.The small borrowers will suffer.. If anything, Uhuru with this law has ensured that his government will borrow at very low interest rates.
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