In addition the facility fee for the loan will start from as low as 2% per month. Customers will also have the option of two fixed savings options, a fixed deposit account and a target savings account.

The bank has seen its customer transactions with M-PESA triple to KShs. 125 billion, while the volume of transactions has grown from 10,000 a day to 100,000.

KCB customers can now enjoy credit facilities from as low as KShs. 50 to as high as KShs.1 million instantly on their mobile phones an innovation of branchless banking as our next frontier.

To access the service, customers will be required to dial *844#, accept the terms and conditions and proceed to save or borrow depending on their needs. The customer’s loan limit will be determined by a number of factors, including but not limited to, the amount of savings that the customer has, the customer’s usage of M-PESA, and their savings on other KCB platforms.

The KCB M-PESA Account has flexible repayment periods from one month to six months, levies affordable interest rates starting from 2% while offering access to instant loan facilities on request. The customer can also save, place standing orders or make fixed deposits on their phones.

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Coming hot on the heels of the Bank’s recent line of credit agreement of Khs 3.4 billion (USD40 million) with Proparco, a private sector subsidiary of AFD, Chase Bank has been actively stepping up in strengthening and scaling up its loan offering to the sector.

This is the first time AFD has signed such a risk sharing partnership with Chase bank. This facility unlocks opportunities for the SMEs to access credit on favourable terms, hence fostering growth and employment, which are much needed in the current economic environment.

According to the Chase Bank’s Deputy Chief Executive Officer, Paul Njaga, the Bank’s move to engage in such strategic alliances is aimed at enabling the SME sector to enjoy quicker access to financing. He noted that under the portfolio guarantee arrangement, the Bank will match AFD’s undertakings in every transaction, bringing the total maximum portfolio to EUR 4million (Kes 500Million). He disclosed that the facility is based on a 50/50 risk sharing agreement.

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Mpesa agents can now borrow Kshs. 50,000 to Kshs. 5 million to boost cash float. The Repayment period is 12 months.

KCB Bank will also allow MPESA agents to take loans worth up to 6 times their average commissions earned over a 6-month period.

In order for entrepreneurs to access the loan facility, they will be required to visit any KCB branch countrywide in order to access the loan.

Photo Courtesy of Business Daily

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The bond is expected to increase Housing Finance participation in the property sector, while at the same time allowing Kenyans to participate in housing development through an attractive investment opportunity. The funds will also create significant mortgage lending opportunities for the company.

See Also: Housing Finance Looking For Ksh. 1.7 Billion Loan

The offer for the second tranche began on 1st October and closes on 12th October 2012.

In 2010, Housing Finance raised Ksh. 7 Billion against a target of Ksh. 5 Billion. HF opted to accept the entire amount.

Housing Finance has positioned itself as a one stop shop for property solutions over the years.

Will you participate in the Housing Finance Bond Issue?

Photo Courtesy of in2eastafrica.net

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This is one of the recommendations contained in the company’s new five year Strategic Plan that the shareholders of SISDO adopted at their Annual General Meeting held at the Harlequins Sports Club.

According to the chairman of SISDO Board of Directors, Prof. Roselyn Gakure, the microfinance institutions was already on course to attain the ambitious target. She noted that SISDO had already disbursed more than Ksh.300M in the first six months of 2012 up from Ksh150M during the same period last year.

“We see this as a very achievable target, going by what we have been able to achieve in the first six months of 2012. The new management has taken this new challenge from the Board with a lot of gusto and we are happy to report to our shareholders that we are already on course in attaining our objectives set in the new strategic plan”, said Prof.
Gakure.

The new chief executive officer of the company Mr. Moses Banda told shareholders that one of his key deliverables was to convert SISDO into a deposit taking institution and a bigger loan book would give SISDO the asset base to deliver on that objective.

According to the chairman’s report which was debated and adopted at the meeting, the company made a profit after tax of KES. 12M compared to KES. 19.45M recorded in 2010 which was a 37 percent drop. Its loan portfolio grew from KES218 million to KES. 270 million which was a 24 percent growth over 2010 while balance sheet grew by 13 percent from KES. 414M to KES. 467M during the same period under review.

“We are at a very significant point in our growth plans and I am confident that we shall be a deposit taking institution in no time. For example, our clients who number over 10,000 have cash collateral deposited with us in excess of KES. 207.6M up from KES.181.5M deposited the previous year. This means that this is cash that is available for onward lending if we were a deposit taking institution. We don’t have to look far, our current client base is sufficient hunting ground for deposits”, Mr. Banda told shareholders.

Photo Courtesy of congresoflacso50.org

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Barely three working days after CBK lowered the CBR there was an article titled “Unless Kenyan banks lower their greed, our economy is threatened.” Others articles have appeared elsewhere with opinions centred on this issue. However, what is missing in all articles is the whole truth and the actual facts.

The first fact is that banks actually have responded to CBK and have begun to lower their lending rates.

The truth is some banks lowered their rates even before the CBK decision. For example, both Victoria Commercial Bank and Kenya Commercial Bank (KCB) lowered their base lending rates, effective the beginning of July.

Other banks that have announced lower lending rates and base rate cuts include Prime Bank, Credit Bank, CFC Stanbic, Citibank, Barclays, Co-Operative Bank and Standard Chartered. And all this happened within the first two weeks of the MPC announcement.

The second fact is that not all banks increased their lending rates when the CBR was increased and therefore will not be likely lowering their lending rates. The rates were already priced low.

These banks decided to absorb the increased cost of funding due to increased rates they had to pay on their deposits. It should be expected that these banks may not reduce their rates at the moment just because the CBR is going down since they actually did not increase their rates in the first place.

So some perspective and history needs to be put in the debate so that people do not expect their mortgage payments to go down when in the first place the payments did not go up following the rise in the lending rates.

The third fact is that rates will not go down overnight like it happens with the fuel prices when the Energy Regulatory Commission announces a change in fuel prices.

The question is whether it was reasonable to expect that each and every bank would reduce their lending rates on the Friday following the MPC meeting on Thursday.

When the CBR falls, it signals to the market the direction and quantum of movement of all interest rates. The effect is that the market then starts pricing the funds (deposits) to the banks lower and the banks are then correspondingly able to pass on this to borrowers through reduced lending rates, hence the lag as the deposit rates do not react to signal instantaneously. Some banks may however strategically take a view that since the deposit rates (cost of funds) can only move in a given direction following the fall in the CBR (i.e. downwards), they would move fast, initially at the expense of their margin but in order to capture the market share. This would then explain why some banks react immediately CBR goes down while some appear to take time.

Finally, with a current account deficit of 11.3 percent of GDP recorded in May 2012, I do not think we should be agitating for a rapid growth in credit at this time because it will end up choking growth even more. The economy is still very vulnerable. We are likely to see a more rapid rise in inflation and depreciation of the exchange rates which will increase inflation further when people start using their loans to import goods. Just quoting lower inflation figures alone to justify arguments for a more rapid reduction in interest rates misses the point.

For lower interest rate to be sustained in the long term, the path to the lower rates must be comprehensive. While recognizing the important role that banks have to play in the process, all of us have a part to play including the government as well as the regulator. The good news is that engagement has started between the Kenya Bankers Association and the various stakeholders, mainly CBK as well as the Judiciary to address the inefficiencies within the sector. In addition, there has been progress through the Credit Information Sharing Initiative and soon banks will be sharing positive data with the overall goal of bringing down the credit risk (and loan costs).

Dr. Oduor heads the Centre for Research on Financial Markets and Policy at the Kenya Bankers Association.

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