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Banks rivalry denies shylocks clients

Nairobians may soon witness the end of shylocks if a new survey is anything to go by.

The FinAcess National Survey 2013 shows that the number of people seeking quick loans from the unpopular lenders has declined to 7.8 per cent compared to 25.4 per cent five years ago.

“This shows that people are now moving towards using a broader portfolio of financial services and products to satisfy their needs,” said Prof Njuguna Ndun’gu, the governor of Central Bank of Kenya, during the launch at Serena Hotel.

Shylocks blossomed at every corner shop in Nairobi streets at the backdrop of low financial inclusion and inability to readily access credit from banks.

These informal money lenders are known to give credit with punitive high interest rates against collateral like electronics, lands and cars.

Often, clients under shylocks mercies have been through terrible moments with their pricey collateral sold at hefty prices to recover the debt.

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“I get hundreds of complaints from those who have lost their property to shylocks and I ask, what am I meant to do? They are not regulated at all,” added Prof Njuguna.

The survey shows that Kenyans prefer borrowing money from banks, saccos and other regulated financial institutions.

Commercial banks have lowered their interest rates making it easire to acquire loans.

This follows a move by the CBK to retain its benchmark lending rate at nine per cent. This has largely been contributed by the friendly credit terms that banks have introduced as competition for customer’s intensifies.

Despite this, a number of Kenyans are still falling prey to these shylocks. Shylocking is still informal in Kenya, with some unfortunately facing arrest as they are thought to be criminals.

A perfect example is the recent scandal involving Dennis Mwangeka, which was widely publicised, only for the police to establish that he was a shylock and not a car thief as it was alleged.

Shylocks have always had an easy ride to riches at the expense of poor Kenyans and that has for a long time undermined the mainstream financial sector.