adminKenya says it will raise the amount of bank deposits eligible for insurance protection as authorities seek to cover more savers from potential global disruptions in banking.
And the Kenya Deposit Insurance Corporation (KDIC) says it is reviewing the insured deposit coverage limit of Ksh500,000 (US$3 597.12) to be in line with ongoing realities on banking threats.
Kenya’s National Treasury Cabinet Secretary Njuguna Ndung’u said the financial stability risks have increased rapidly as the resilience of the global financial system has been tested by high inflation and rising interest rates.
Mr Ndung’u while presenting the first budget for the Kenya Kwanza administration for the 2023/2024 fiscal year, said on Thursday that the revision of the deposit coverage limit seeks to ensure protection of the Micro, Small and Medium Enterprises (MSMEs).
“In order to enhance protection of depositors, the KDIC is in the process of reviewing the current coverage limit of Ksh500,000 with a view to ascertain its adequacy in protecting the MSMEs,” said Ndung’u.
Kenya increased the insured deposit coverage limit to Ksh500,000 from Ksh100,000 (US$719,42) effective July 1 2020, to instil confidence in the banking sector after three banks— Dubai bank, Imperial Bank and Chase bank —collapsed in quick succession 2015 and 2016 with an estimated Ksh100 billion (US$719,42 million) in customer deposits.
The deposit insurance fund which is run by KDIC was created to compensate depositors of collapsed institutions and to boost confidence in the banking industry that had been rocked by a series of bank failures in the 1980s and early 1990s.
Kenya’s new Insolvency Act compels regulators to ensure revival of institutions, with liquidation being a last resort. -The East African
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