Kenya Deposit Insurance Corporation(KDIC) is moving to implement the risk-based premium assessment for banks, effective from midnight tomorrow.
Commercial banks shall pay additional premiums to the deposit authority in the new model based on their risk perception.
KDIC Assessment has a flat rate and an additional rate
The new risk-based premium assessment incorporates the standard flat rate of 0.15% of deposits held by each lender plus an additional factor based on the new risk model.
The Deposit Authority says it will cap total premiums to a maximum of 0.25 to each party.
Muhamud Muhamud, KDIC Managing Director, says the new risk-based premium model will end bank failures. It requires lenders to adopt prudent practices and shun enormous appetites for risk.
The new pricing mechanism on banking premiums aligns with the start of enhanced payout to depositors with deposits in Charterhouse and Chase Bank to a maximum of KSh 500,000.