There’s nothing harder and more frustrating than getting a business loan from our banks. It only gets easier as you take subsequent loans as you repay. To get such a business loan the banks will ask you for so much even if you provide a security whose forced value more than 150% of the amount of loan you seek. They will ask you for everything ranging from the business plan, bank statements, projections, CVs, collateral documents etc. They’ll only fall short of asking nay demanding your grandma’s birth certificate. Wish we could put them through the same hell before we repay. Growing as a businessman in Kenya is just hell if you depend on our banks for financing. Our politicians can talk all they want about helping youth grow in business but the reality is far from all the rhetoric. Bankers, why ask for collateral if you are not going to even consider it in assessing whether to give me the loan in the first place? If you make me chase a loan from you for 3 months, it’s unfair to ask me to repay after just a month because you’ve just fucked up my timelines and possibly made the opportunity less rewarding.
To all my frustrated entrepreneurs, let’s get rid of our stress by fucking a d fucking and fucking. Good thing the weather is ideal for just that.
Banks became a bit uptight with their lending when the interest rates were capped. Seeing that now the Government has cut a deal with IMF (and screwed loanees in that regard)t o repeal that law the banks may loosen their hands a bit.
Problem is that the banks are using the interest rate cap as a way to arm-twist the government/parliament into rescinding the law. There’s no reason why banks can’t make money on the current interest rates. The guys are just greedy having got used to super profits that they are still unwilling to accept normal profits. They should come up with a points system whereby a person who repays his loan promptly is allowed a bigger loan on the next borrowing - M-Shwari style.
Before the capping banks would make huge profits that would cater for defaulted funds some were making an almost 40% margin at the time. now with the current rates they are very careful in lending hence the requirements. if you were to take a loan of 100,000 to repay in say 6 months from the computations you will wonder how they are surviving.
I agree it has been a very big problem coz if you required funds immediately they might even end up screwing your project/ projection. and other banks will keep you in waiting and finally decline esp on huge funds.
man I am a former banker and on interest capping, I agree with the bankss100%. When caps were introduced, there was also another one for interests on deposits where banks pay for deposits at a minimum of 7.35% p.a and give loans at 14% p.a (2017 rates). For every 100k deposit, an interest of 4,028 is paid to the customer while a loan of the same amount brings 7,748 to the bank (i can explain how i got 4028 & 7748). a loan can be defaulted, rent for those branches go as high as 1M per month, salaries are paid, internet, water, electricity, food, etc. Now do your math.
Foreign banks gain mainly from other non-cash opportunities like being safe custody for documents, forex, investment banking which don’t happen na customers wetu wa Muchatha and Gikomba type
I’m trying to understand this. I’ve never seen an interest payment on my savings credited to my account and when I asked about fixed rates from two banks sometime mid last year I didn’t get a rate better than 4% for an amount close to 2m.
The CBK classifies accounts into transactional accounts and savings accounts. interest on deposits is paid only on savings accounts. the problem with most Kenyan banks won’t tell u which of their accounts are savings and which are transactional. so most guys end up with transactional accounts which are not binding to the law on interest on savings.
The only math that counts is in their annual financial reports which incidentally have never been in the negative…(save of course for some government banks…sic)
They charge a processing fee which is I think 5% of the amount burrowed. Bank like guving loans to someone with a car or land with the hope he fails to pay and possess it. That is the way they make huge profits, kama huna kakitu…pole. though they call it business loan, in reality it isn’t, for without land or logbook hupati. Even if your business financial statement are good
As long as these interest caps remain, sahauni loan. Especially kama wewe ni sufferrer.
@Okiya hebukuja hapa uelezee raiya vile IFRS inakuja, and how they have to adjust their Provisions for loans. With IFRS in effect, and the current capping remains, mutasahau loans kabisa!!
They will just extend the period of repayment and not the monthly repayment amounts. So kama mortgage yako ilikuwa imebakisha 5 years wataongeza another kitu 3 years