Wednesday, August 02, 2006

Equity Bank's business model: An inovation or a risk

Some of the more controversial business models of equity bank:
Clearing cheques:
If you a deposit a cheque today, it takes four working days before it clears for you to access the cash. At Equity, you can deposit a cheque today, and collect the cash but pay 3% of the amount as fees.

You can take an overdraft on your account, you pay flat fee of 5%. It doesnt matter if its for a month or 2 days. Eg. On 100k you pay 5000 for a day or for a month.

Approval of loans, cheques clearance and overdrafts
In other banks, there are clear and rigid requirements to get a loan. viz proof of employment, 6 months bank statements etc. At Equity no need. Just present yourself to the bank manager and he looks at your account and tells you if you qualify, the amount possible for lending and the terms.

Decision on Interest rates chargable
On most banks, the rates are fixed at the head office for each category of clients. At Equity, its decided per loanee by the bank manager!!

Kenyan Blogs


Blogger coldtusker said...

They are VERY innovative! I like that!

Very smart on fee for early clearing! Sometimes better 2pay 3% & get cash for other deals!

I did not understand the overdraft fee. Please explain with details & examples. If I "borrow" 10,000 I pay 5% (loan fee?) but do I pay interest for the days i.e. is the 5% for 1 month, 2 months, 1 year? Is there a maximum time limit?

I like the loan approval process! Only problem is what if the manager is corrupt i.e. lower interest charge to "friends", family, etc?

Also loan quality can suffer if manager "favours" his family & friends over credit checks or collateral.

Equity will really shake up the market!

4:41 PM  
Blogger bankelele said...

also 100/= to clear a cheque is preety steep

5:08 AM  
Blogger coldtusker said...

No answers to my questions????

7:29 PM  
Blogger gathinga said...

cold: sory abt late answers

if you borrow 10k as O/D, you pay a 5% upfront as 'fee'. You can take this for up to 12 months. The interest will be decided by the branch manager and will be in the range of 24% pa

With respect to the objectivity of the manager vis favouring friends,m girlfriends or family.... i dont know if there are checks in place.

these guys are pretty smart

3:11 PM  
Blogger coldtusker said...

24%???? These guys are up there with the usury... Imagine BBK charging 24% + 5% & the government & idiotic MPs will start calling BBK names while bringing in "controls"

BUT if you want to borrow... well... pay or don't borrow!

Smart guys but I see problems with defaults if the manager lends willy nilly...

5:03 PM  
Anonymous Anonymous said...

What is you e-mail address?

Are you still buying Uchumi shares?

4:01 PM  
Blogger gathinga said...

am still buying uchumi
mail me!!

5:10 PM  
Anonymous Anonymous said...

About buying Uchumi - kwani there's OTC market for these shares? At what rate?

4:52 AM  
Blogger pesa tu said...

Its a good model for people who need access to capital quickly(informal traders).
The only danger is that bad loans can swamp u quick if u dont have a good risk measuring system.
Other banks do the same thing but only for high net worth clients.
Did u jnow u don't need security to get a Bank Loan. Only proof of capacity to repay.

Relevant blog keep it up.

7:35 AM  
Blogger gathinga said...

anon@arrangements can be made before some lawyer reagrding uchumi shares transfer.

pesa tu@thanks. its only recent that banks have come down to offer loans without security... after the interest rates on govt securities crumbled, otherwise it was a nightmare.

3:43 PM  
Anonymous Anonymous said...

Dear Visitors, This blog is really nice and informative. We are pleased to know this blog is really helping people. Its our pleasure to post informative content on this useful blog created by webmaster. Currently something is cooking in the Indian stock market, We know it but unfortunately we cant disclose the reason so openly. We strongly suggest everyone not to take any long position at these levels. We will see Pullback in the market very soon but that will be a fake one so don’t consider pullback as opportunity to go Long in market( Delivery based). As after that initial pullback we can see fall once again. As mentioned cant disclose it still giving minor hint see call and put section and think why you are not able to access few options and check December part and think who are the people behind it?? We suggest wait for falls to take delivery till then prefer only intraday else you will find yourself out of BSE and NSE one fine day. For any query feel free to contact us. Regards SHARETIPSINFO TEAM +91- 9891655316 +91- 9899056796 +91 - 9891890425

7:49 AM  
Anonymous Anonymous said...

i bank my cheque on tuesday and its not ready even today can i still go and have money still with the 3%???

10:17 AM  
Anonymous moneyworldindore said...

This is the perfect blog for anyone who wants to know about this topic. It contains truly information. Your website is very useful. I admire the valuable advice you make available in your expertly written content.I want to thank you for this informative read; I really appreciate sharing this great -
stock tips
Commodity tips

11:22 AM  
Anonymous gravitareserach said...

Some of your post here really made me confused. But rather i enjoyed reading your post, lots of new ideas i have found. Thanks for sharing!
stock Tips
commodity tips
nifty tips

11:20 AM  
Blogger The GRS Solution said...

Thank you for sharing these information with us, it's really very helpful..........We also Provide Best Commodity tips , intraday trading tips, gold silver price, stock tips and also give free trial visit
share market advisory

8:40 AM  
Blogger Soniya Tanwar said...

Adviser street equity tips Provider in India. We are Best Equity Market Tips Service Provider, offers Intraday Equity Trading Tips Free Trail on Mobile for Today & Tomorrow.

10:19 AM  

Post a Comment

Subscribe to Post Comments [Atom]

Links to this post:

Create a Link

<< Home