Kenya, Uganda, and Tanzania have increased compensation for victims of collapsed banks as a way to boost depositors’ confidence in the region’s banking sector.
The regional member states are making plans to harmonize rules and regulations for dealing with troubled banks as they were part of the measures for enhancing the stability of the region’s banking industry.
The Kenya Deposit Insurance Corporation recently increased the insurance coverage for depositors to KSh 500,000 from KSh 100,000. The initial insurance coverage was in force for 30 years. This decision came after the KDCI and the US treasury carried out a study on the possibility of reviewing the insured deposits. In Kenya, 90% of total deposits have balances of less than KSh 100,000 and 1% have balances above KSh 1,000,000.
In Uganda, Mr. Matia Kasaija, the Finance Minister also announced plans to increase the deposit insurance limit from USh3 million (KSh 84,000) to USh10 million (KSh280,000) before the end of the year.
In Tanzania, the Deposit Insurance Board increased the amount of protected deposits from TSh 500,000 (KSh 22,000) to TSh 1,500,000 (KSh68,000). In Rwanda, the Guarantee Fund of Rwanda protects deposits of up to RwF 500,000 (KSh56,000) per depositor. In the likely event that a bank was put under liquidation then the depositor will be compensated within a period of 30 days.