The Mountain Journal
High interest rate has overburdened customers thus disrupting their loan repayments capacity.
A financial expert Hezekiah Kariuki says the high interest rates in the markets have continued depressing the majority of the customers leading to the increased failure on loan repayment.
The financial advisor says high interest rates, and penalties may be the major cause why many financial companies have huge un-paid loan books.
Kariuki a financial advisor and a Director Together as One Microfinance believes over burdening borrowers with huge interests and un realistic penalties is the major cause of Non performing loan in various lending institutions;
” It’s better to target little returns and get repaid than to aim for huge figures and end up following the loan defaulters where the majority escape ,” he said.
He reiterated that cash flow is key in lending business and should always be maintained by lending responsibly instead of lending huge amounts that are not sustainable.
“The secret of lending business is not just in lending but mostly on how the money can be repaid,” he said.
Also a Director Comfort Homes said low interests in lending attracts more clients and helps the company to leverage or cut costs of operations as opposed to few clients.
He called on investors in the lending industry to caution borrowers by lowering interests especially in these hard economic times.
“Lending on exorbitant charges remains a major risk to the economy to both the lender and the loanees,” said Kariuki in the weekly adverse.
