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"type": "speech",
"speaker_name": "Alego-Usonga, ODM",
"speaker_title": "Hon. Samuel Atandi",
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"legal_name": "Samuel Onunga Atandi",
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"content": "There are certain facts which Members of Parliament need to be aware of when canvassing matters to do with banking. First, banks are classified into three segments. The segments are called tier 1, tier 2 and tier 3. Tier 1 are those banks that are big, heavily capitalised, make more profits, are arrogant and the reason why we have a negative attitude towards banking profitability. There are tier 3 banks which are the small animals within the banking segment. These are small banks which are not capitalised enough. They have challenges meeting their cash ratios and problems lending large tickets. They make small profits. When Members of Parliament legislate on matters to do with banking, it is important for them to be aware that there are small and big animals. This is important for informing the kind of laws that we will make to regulate the sector. Looking at the financial sector in other more developed countries, you find that banks are few. In China, banks are few and big. There are banks that can give credit to governments. Our banks cannot. In fact, our banks cannot even fund new ideas. They only fund ongoing ideas. As a Parliament, we need to get to a situation where we have large banks where you can simply go with an idea and they give you money and a grace period of maybe two years for your idea to germinate. That does not happen today. One of the things I urge this House to do in future is probably to encourage what is happening now, namely, consolidation. Right now, a lot of banks are consolidating. They are coming together so that we create a few large banks that can fund business ideas to fund the economy. There is no reason why when the Government wants credit from financial institutions they have to go to foreign countries like China and Europe. Why should they do that? They are doing that because our economy does not support big banks. This is something that this House needs to look at and appreciate. How do we create large banks that can support the economy? We can do this through consolidation. Secondly, let us legislate on the capital requirements for banks. We need to increase the capital ratios for banks. Let us agree that to start a bank, you need to have Kshs20 billion. A bank with a base of Kshs20 billion can do business. We will need to collapse these small banks and The electronic version of the Official Hansard Report is for information purposes only. Acertified version of this Report can be obtained from the Hansard Editor."
}