The Kenya Deposit Insurance Corporation (KDIC) has raised the deposit insurance coverage from KSh100,000 to KSh 500,000 so as to protect depositors and also encourage saving in banking institutions.
The new limit shows an improvement to 20%, up from 8% that has been in place since 1989.
According to KDIC Chief Executive Mahmoud Ahmed Mahmoud, the depositor cash protection will be enabled by a risk-based premium rate determined by individual bank’s risk on liquidity and asset quality, corporate governance and amount of non-performing loans. This, therefore, will stop the current flat-rate premium rate which charges 0.15% of the total deposits held.
“If you have deposits of Sh500,000, we will pay the deposits within 30 days starting first July 2020,” he added.
Currently, deposits of more than Sh100,000 are settled after the liquidation of banks’ assets leading to loss to shareholders.
The Kenya Deposit Insurance Corporation (KDIC) is a Kenya government corporation providing deposit insurance to depositors in Kenyan banks and deposit-taking microfinance institutions. It has the powers to guarantee deposits of insured institutions, carry out supervision of insured institutions, partake in problem/failing banks resolution process and liquidate failed/closed financial institutions.