KIDC Revises Deposit Insurance Coverage to Kes 500,000 From Kes 100,000
Customers who have up to Kes 500,000 in deposits will recover all their money in the event their lender is liquidated.
This is after the Kenya Deposit Insurance Corporation (KDIC) increased the coverage limit of all deposits accounts from Kes 100,000 to Kes 500,000, starting 1st July, 2020.
“We have increased the limit to reflect the growth in our economy and will give protection to depositors in the unlikely event of a bank failure,” said KDIC Chief Executive Officer Mohamud Ahmed
KDIC says the new limit will cover 99 per cent of depositors with funds in banks and deposit-taking microfinance institutions.
“Raising the limit to Kes 500,000 means we have also increased our exposure from the current Kes 294 billion to Kes 679 billion which also shows our confidence in the liquidity position of our banks,” Mohamud said.
KDIC said it has also waived annual premiums for commercial banks for six months to December 2020 in light of the Covid-19 pandemic. The risk-based premium model scheduled to commence tomorrow has also been deferred by a year.
“We have also decided to waive the premium of 0.15 per cent of deposits that banks are required to make from July to December,” Mohamud said. “While this will impact our revenue streams, we hope to offer banks a reprieve to invest that money in other areas.”
KDIC has since ramped up its mandate in recent years following the move by the Central Bank of Kenya to put at least three banks under receivership.
Kenyans have in the past decade three bank failures, including Dubai Bank, Chase Bank and Imperial Bank, which saw most of the depositors’ funds, locked for years pending liquidation.
The depositors’ agency has also given banks a six-month grace period to pay annual premiums of 0.15 per cent of deposits or Sh300,000, whichever is higher to cushion the banking sector against negative effects of coronavirus.
Banks are supposed to pay deposit premium in July but the agency has extended the payment deadline by another six months to December 31 after lenders were forced to restructure close to Sh678 billion after Central Bank of Kenya (CBK) pleaded payment leniency for borrowers.
Besides, the statutory deposit underwriter has shelved plans to let banks pay annual premiums based on risk levels by another year.