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150 Pages«<137138139140141>»
Law Capping interest rates
wukan
#2761 Posted : Friday, March 15, 2019 11:10:53 AM
Rank: Veteran


Joined: 11/13/2015
Posts: 1,231
tom_boy wrote:
FRM2011 wrote:
snifadog wrote:
FRM2011 wrote:
newfarer wrote:
tom_boy wrote:
Interest rate caps should stay. So far I have not seen any tangible effect of the caps. Banks are still making super profits. Credit worthy people are still getting loans. Shida iko wapi?

me too .if you are creditwothy you should not have problem with the cap..I have seen banks beg me to take loan with them. shida iko wapi?


Allow me to give you a situation on a specific industry. I know a thing or two about long-distance trucking. 5 years ago, banks were falling over themselves to finance customers in this industry.

The trailer part of these trucks are locally built. At some point around 2013, Bhachu & Randon who are the market leaders had a 4-months waiting period for orders. Smaller players expanded to fill in the gap. Load trailers, Ocean trailers, Hans trailers, Trans-trailers, TTL, Supa trailers e.t.c. These were employing 1,000s of artisans to fabricate the bodies.

Since the rate capping, only Stanbic and NIC are willing to finance trucks and they cherry-pick the very best customers. Equity, KCB, coop, Barclays and Stanchart don't even look at asset finance applications after the rate cap. As financing dried, these body-builders retrenched massively. Today, you can walk into Bhachu and they start working on your order tomorrow. Business is that bad.

No other president would have signed this bill. Even Moi, daft and crooked as he was, refused to sign. Only Uhuru could.


If this trucking business was so good and flourishing, why didn't the banks continue to finance it even after the caps? something doesn't add up. Perhaps it was all along a poor business being propped up by availability of credit



The banks stopped financing SMEs in general because our crooked and greedy government is borrowing from the same banks at 13%. Why would a bank bother employing credit analysts to process customer applications while a corrupt govt wants the same money. 100% risk free.


I have never found anyone to explain to me, in simple language that my simple mind can understand, how on earth does someone who was servicing loans on time at 20% interest suddenly become a poor credit risk at 13% interest.
Even senior bankers cannot explain this phenomenon.


20% interest rates also indicates a loose monetary policy there is a lot money in circulation so prices of assets like land or shares are going up so it will be easy to repay the loan. At this time bank is thinking on return on capital. If money is tight then 13% is for prime borrowers, the bank has to think of return of capital. The borrower at 20% is risky compared to the prime borrower so you lend to the prime borrower first. If everyone is at 13% you only concentrate on the prime borrower it is less expensive to collect on his debt.
tom_boy
#2762 Posted : Friday, March 15, 2019 1:45:47 PM
Rank: Member


Joined: 2/20/2007
Posts: 725
I begged for a simple answer. This one can only be understood by those already brainwashed by economic theorems that are theoretical. For example, do high rates charged on mobile lending indicate loose monetary policy or more tied to risk involved. If the latter, then proceed to answer how my risk profile changes just because I have been offered a cheaper loan
They must find it difficult....... those who have taken authority as the truth, rather than truth as the authority. -G. Massey.
wukan
#2763 Posted : Friday, March 15, 2019 2:03:08 PM
Rank: Veteran


Joined: 11/13/2015
Posts: 1,231
tom_boy wrote:
I begged for a simple answer. This one can only be understood by those already brainwashed by economic theorems that are theoretical. For example, do high rates charged on mobile lending indicate loose monetary policy or more tied to risk involved. If the latter, then proceed to answer how my risk profile changes just because I have been offered a cheaper loan


Mobile lending is done on facility fee not interest rate. You are paying for the convenience much like a credit card. Ni kama kula chapati hilton hotel.

By the way money, risk, price is very theoretical. Let me try explain this further. Values are in the minds of men and, like the minds of men, they are never constant. There is no standard by which ever-fluctuating values can be measured. There are no constant units, and never can be any, with which to measure values. The same economic good has different values for different people, and different market values at different times. Your risk profile is also never constant.

Most importantly the value of money is not a legal proposition. This is what the high court judges missed.
mlennyma
#2764 Posted : Friday, March 15, 2019 2:24:51 PM
Rank: Elder


Joined: 7/21/2010
Posts: 5,996
Location: nairobi
Kcb & equity volume welcomes the news
"Don't let the fear of losing be greater than the excitement of winning."
xtina
#2765 Posted : Friday, March 15, 2019 3:28:50 PM
Rank: Member


Joined: 6/26/2008
Posts: 271
[quote=mlennyma]Kcb & equity volume welcomes the news[



Applause Applause CFC too. Just clocked 100. not sure if I should add more now or wait till euphoria ends.....
murchr
#2766 Posted : Friday, March 15, 2019 4:10:14 PM
Rank: Elder


Joined: 2/26/2012
Posts: 14,952
wukan wrote:
tom_boy wrote:
I begged for a simple answer. This one can only be understood by those already brainwashed by economic theorems that are theoretical. For example, do high rates charged on mobile lending indicate loose monetary policy or more tied to risk involved. If the latter, then proceed to answer how my risk profile changes just because I have been offered a cheaper loan


Mobile lending is done on facility fee not interest rate. You are paying for the convenience much like a credit card. Ni kama kula chapati hilton hotel.

By the way money, risk, price is very theoretical. Let me try explain this further. Values are in the minds of men and, like the minds of men, they are never constant. There is no standard by which ever-fluctuating values can be measured. There are no constant units, and never can be any, with which to measure values. The same economic good has different values for different people, and different market values at different times. Your risk profile is also never constant.

Most importantly the value of money is not a legal proposition. This is what the high court judges missed.



We tried to explain that to this dude sometime back but he couldn't gerrit...If you succeed am buying you chapati at Hilton
"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
.
Angelica _ann
#2767 Posted : Friday, March 15, 2019 5:06:09 PM
Rank: Elder


Joined: 12/7/2012
Posts: 10,939
murchr wrote:
wukan wrote:
tom_boy wrote:
I begged for a simple answer. This one can only be understood by those already brainwashed by economic theorems that are theoretical. For example, do high rates charged on mobile lending indicate loose monetary policy or more tied to risk involved. If the latter, then proceed to answer how my risk profile changes just because I have been offered a cheaper loan


Mobile lending is done on facility fee not interest rate. You are paying for the convenience much like a credit card. Ni kama kula chapati hilton hotel.

By the way money, risk, price is very theoretical. Let me try explain this further. Values are in the minds of men and, like the minds of men, they are never constant. There is no standard by which ever-fluctuating values can be measured. There are no constant units, and never can be any, with which to measure values. The same economic good has different values for different people, and different market values at different times. Your risk profile is also never constant.

Most importantly the value of money is not a legal proposition. This is what the high court judges missed.



We tried to explain that to this dude sometime back but he couldn't gerrit...If you succeed am buying you chapati at Hilton


The other thing is that banks would rather lend to GoK at 13% without effort, than to lend to the guy they used to lend to at 20% but now they are forced to let to him at 13% with same effort previously employed. Which one would you go for, you don't need to be a genius at all to make the right choice here!!!
In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
passiveinvestor
#2768 Posted : Saturday, March 16, 2019 8:39:08 PM
Rank: Member


Joined: 12/8/2006
Posts: 71
alma1 wrote:
Let Omtata appeal if he wishes.

I am against any government caps on anything. I think you have seen my issue with farmers. But at the same time I still believe gov't should never ever be involved in pricing.

Even this issue of matatu pricing. I am totally against it.

Let the banks set their rates.

Thus far the CBK and gov't have been using the banks as their punch boys. Listen. Interest rates go up or down depending on gov't policy.

Since Kenyan gov't policy is either raira charo nefa mbe, Kibaki tosha and such nonsense we get lazy policy makers.

I really hate Kenyan banks. But I don't believe that gov't pricing has ever helped any economy. After all, who told you to seek a loan from Stanchart? Ni mamayako?


That's my view and I ain't changing it.

Hi all. Long analysis warning. But looks like caps are here to stay at least for now.
Thoughts?
https://comparerateskeny...l-is-there-any-way-out/
jmbada
#2769 Posted : Monday, March 18, 2019 8:01:56 AM
Rank: Member


Joined: 1/1/2011
Posts: 385
passiveinvestor wrote:
alma1 wrote:
Let Omtata appeal if he wishes.

I am against any government caps on anything. I think you have seen my issue with farmers. But at the same time I still believe gov't should never ever be involved in pricing.

Even this issue of matatu pricing. I am totally against it.

Let the banks set their rates.

Thus far the CBK and gov't have been using the banks as their punch boys. Listen. Interest rates go up or down depending on gov't policy.

Since Kenyan gov't policy is either raira charo nefa mbe, Kibaki tosha and such nonsense we get lazy policy makers.

I really hate Kenyan banks. But I don't believe that gov't pricing has ever helped any economy. After all, who told you to seek a loan from Stanchart? Ni mamayako?


That's my view and I ain't changing it.

Hi all. Long analysis warning. But looks like caps are here to stay at least for now.
Thoughts?
https://comparerateskeny...l-is-there-any-way-out/

.....mmmmeeh
Ngalaka
#2770 Posted : Monday, March 18, 2019 11:32:37 AM
Rank: Veteran


Joined: 10/29/2008
Posts: 1,533
tom_boy wrote:
I begged for a simple answer. This one can only be understood by those already brainwashed by economic theorems that are theoretical. For example, do high rates charged on mobile lending indicate loose monetary policy or more tied to risk involved. If the latter, then proceed to answer how my risk profile changes just because I have been offered a cheaper loan


At 20% interest rate, lending to 40,000 borrowers you reckon that even if (likely) 15 percent of the borrowers default at varying points of the facility tenure, in the final analysis the segment as a whole will return a profit.

At 15% interest rate, the ball game plan is different. The ‘spreads’ are too thin, even a lower percentage in defaults could see you lose your money.
Again policies are made on the whole, in regard to a segment.

One makes a logical business decision – comparatively, lending to the common guy is generally riskier than deploying the same resources to lend to the Government or trade elsewhere. Being compelled to lend to the common guy at 14% with the attendant higher risk, while there are other less risky options with generally similar returns, they take the obvious choice.
Isuni yilu yi maa me muyo - ni Mbisuu
Ngalaka
#2771 Posted : Monday, March 18, 2019 11:38:37 AM
Rank: Veteran


Joined: 10/29/2008
Posts: 1,533
Now I have a question of my own;

If it makes all perfect economic sense to lend at 14% in the Kenyan economy, how come even before the rate caps not one 'shrewd entrepreneur' seized the opportunity to price themselves that competitively and in the process undercut the rest in the market.

Logically all business would flow his/her way, and the next thing they would be the largest lender in the economy.

It s a free market, or is it!
Isuni yilu yi maa me muyo - ni Mbisuu
FRM2011
#2772 Posted : Monday, March 18, 2019 11:48:08 AM
Rank: Elder


Joined: 11/5/2010
Posts: 2,397
tom_boy wrote:
FRM2011 wrote:
snifadog wrote:
[quote=FRM2011][quote=newfarer][quote=tom_boy]


I have never found anyone to explain to me, in simple language that my simple mind can understand, how on earth does someone who was servicing loans on time at 20% interest suddenly become a poor credit risk at 13% interest.
Even senior bankers cannot explain this phenomenon.


The answer from the banksters is that they need to price risk which they cannot do within the current margins.

The truth however is different. A risk-free borrower with an insatiable appetite for cash came on board. His name is GoK courtesy of the Jubilee kleptocracy. In today's paper, they are floating a 50B bond @12.2%.

If GoK stopped borrowing like crazy, banks would have no other choice but to lend at the current margins. As it is, they are making record profits while reporting reduced loan books to customers.
AndyC
#2773 Posted : Monday, March 18, 2019 2:48:24 PM
Rank: Member


Joined: 4/21/2015
Posts: 124
Consumer Federation of Kenya (COFEK) appeals against removal of rate caps.
Drama is real!
jmbada
#2774 Posted : Tuesday, March 19, 2019 10:56:18 AM
Rank: Member


Joined: 1/1/2011
Posts: 385
AndyC wrote:
Consumer Federation of Kenya (COFEK) appeals against removal of rate caps.
Drama is real!

...jmbada's, or whoever's article was parly right."...Our Conclusion:
There are numerous upcoming activities in both the Chambers of Legislation and the Halls of Justice..

Still too long for my liking though.
mlennyma
#2775 Posted : Tuesday, March 19, 2019 11:54:03 AM
Rank: Elder


Joined: 7/21/2010
Posts: 5,996
Location: nairobi
AndyC wrote:
Consumer Federation of Kenya (COFEK) appeals against removal of rate caps.
Drama is real!

Why can't they fight to cap house rent?
"Don't let the fear of losing be greater than the excitement of winning."
jmbada
#2776 Posted : Wednesday, April 03, 2019 2:45:11 PM
Rank: Member


Joined: 1/1/2011
Posts: 385
AndyC wrote:
jmbada wrote:
The first big bank to break ranks....Stanchart offering to buy out loans at 11.5%


Link?

Finally.....
https://www.the-star.co....twitter_impression=true

Barclays now matching this offer.
Angelica _ann
#2777 Posted : Wednesday, April 03, 2019 6:25:19 PM
Rank: Elder


Joined: 12/7/2012
Posts: 10,939
jmbada wrote:
AndyC wrote:
jmbada wrote:
The first big bank to break ranks....Stanchart offering to buy out loans at 11.5%


Link?

Finally.....
https://www.the-star.co....twitter_impression=true

Barclays now matching this offer.



These journalists normally write what they want not what is the reality on the grounds. There are many more apartments being built some paid for, while others booked at 10% plus plus. Naysayers.
In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
jmbada
#2778 Posted : Wednesday, April 03, 2019 6:50:55 PM
Rank: Member


Joined: 1/1/2011
Posts: 385
Angelica _ann wrote:
jmbada wrote:
AndyC wrote:
jmbada wrote:
The first big bank to break ranks....Stanchart offering to buy out loans at 11.5%


Link?

Finally.....
https://www.the-star.co....twitter_impression=true

Barclays now matching this offer.



These journalists normally write what they want not what is the reality on the grounds. There are many more apartments being built some paid for, while others booked at 10% plus plus. Naysayers.

You could be right. The journos are so lazy that maybe you even think that they've been paid to muddy the story. In this article, they are citing a "spot check" and went to 1 mall on Thika Superhighway, one block in Lavi and one more along General Mathenge Drive.

And could anyone help me understand this last sentence?
"Ruth Okal, an asset manager at Fahari I-REIT said the sector is witnessing a downfall with landlords willing to bargain with customers.

“Yes we experienced a downfall in one property. Landlords are always left with the choice of letting a tenant vacate and have empty or keep them for six months at one year for free,” Okal said."
Angelica _ann
#2779 Posted : Wednesday, April 03, 2019 7:07:38 PM
Rank: Elder


Joined: 12/7/2012
Posts: 10,939
jmbada wrote:
Angelica _ann wrote:
jmbada wrote:
AndyC wrote:
jmbada wrote:
The first big bank to break ranks....Stanchart offering to buy out loans at 11.5%


Link?

Finally.....
https://www.the-star.co....twitter_impression=true

Barclays now matching this offer.



These journalists normally write what they want not what is the reality on the grounds. There are many more apartments being built some paid for, while others booked at 10% plus plus. Naysayers.

You could be right. The journos are so lazy that maybe you even think that they've been paid to muddy the story. In this article, they are citing a "spot check" and went to 1 mall on Thika Superhighway, one block in Lavi and one more along General Mathenge Drive.

And could anyone help me understand this last sentence?
"Ruth Okal, an asset manager at Fahari I-REIT said the sector is witnessing a downfall with landlords willing to bargain with customers.

“Yes we experienced a downfall in one property. Landlords are always left with the choice of letting a tenant vacate and have empty or keep them for six months at one year for free,” Okal said."


Laughing out loudly Laughing out loudly Laughing out loudly He forgot what he was told to write.
In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
obiero
#2780 Posted : Sunday, April 07, 2019 4:00:34 PM
Rank: Elder


Joined: 6/23/2009
Posts: 12,398
Location: nairobi
Let me leave this here https://www.businessdail...60530-h9xgfbz/index.html
COOP 5,500 ABP12.6; HF 2,000 ABP 5.90; KCB 7,500 ABP 36; KNRE 100,000 ABP 2.90; KQ 392,100 ABP 8.32
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