Over 10 years we help companies reach their financial and branding goals. Maxbizz is a values-driven consulting agency dedicated.

Gallery

Contact

+1-800-456-478-23

411 University St, Seattle

maxbizz@mail.com

Bank depositors' compensation scheme grows to Sh155 billion – Business Daily

Kenya Deposit Insurance Corporation chief executive officer Mohamud Mohamud. PHOTO | SALATON NJAU | NMG
Money held by the Kenya Deposit Insurance Corporation (KDIC) rose by 23 percent to Sh155 billion in the year ended December 2021, enhancing the institution’s capacity to compensate each customer up to Sh500,000 in case of a bank failure.
The Central Bank of Kenya’s latest financial stability report shows that lenders held Sh4.5 trillion in deposits as of December 2021, out of which Sh715 billion was insured across 69 million accounts.
“The Deposit Insurance Fund (DIF) or ‘Fund’, managed by KDIC increased by 23 percent, to Sh155 billion in December 2021, covering up to Sh500,000 per depositor in case of a bank failure. This is consistent with its prudent management strategies,” the report read in part.
The state agency is mandated by law to implement a deposit insurance scheme for customers of member institutions, incentives for sound risk management, and prompt resolution of failed institutions.
The KDIC as a ‘risk minimiser’ provides a safety net to deposits by protecting them against the loss of all their funds in the rare event of a bank collapse.
The report also showed that 99 percent of bank accounts are fully insured, meaning they hold Sh500,000 or less.
Total deposits in the banking sector rose by 11 percent from Sh4 trillion in December 2020 to Sh4.5 trillion in December 2021 due to deposit mobilisation through agency banking and mobile phone platforms, according to the latest industry supervision report.
The State parastatal revised the deposit coverage limit to Sh500,000 in July 2020 from the previous Sh100,000.
The KDIC had earlier said since banks had started adopting the risk-based pricing model, it would introduce fairness and equity in charging premiums. He added that this prompted the increased coverage limit.
Customers of collapsed banks are to be compensated within six months. Those claiming amounts larger than Sh500,000 are to wait until the sale or liquidation of the failed institution.
Some of the banks that have collapsed before include Chase Bank and Dubai Bank, leaving the depositors in anguish over their savings.
The KDIC had announced payment to depositors and creditors in collapsed Dubai Bank, Euro Bank, and Kenya Finance Bank as the State moved closer to winding up the lenders. The agency had made the announcement after a successful recovery process and sale of assets from the three banks under liquidation.
The payments will translate to full compensation to claimants of Euro Bank while those for Dubai Bank and Kenya Finance Bank will have been paid 92 percent and 93 percent respectively.
[email protected]

source

Author

admin

Leave a comment

Your email address will not be published.