This archive report was first published on 30 June 2020.
As the Covid-19 pandemic continues to affect the global economy, Kenya's Deposit Insurance Corporation (KDIC) has taken measures to support the banking industry. On June 30, 2020, KDIC announced that it would delay the implementation of the risk-based premium model by one year.
The decision aims to give banks impacted by the pandemic a breathing space to recover and put their financial records in order. Under the new system, high-risk lenders would pay higher premiums compared to their stable counterparts. However, with the delay, banks will not have to pay the increased premiums for the next year.
According to KDIC Chief Executive Mohamud Ahmed Mohamud, the goal is to ensure no bank failures in Kenya and to have prompt resolution methods in place in case of a problem bank. The revised deposit insurance coverage limit of Ksh500, 000 ($5,000) has also been enforced, effective July 1.
The deposit insurance fund, run by KDIC, was created to compensate depositors of collapsed institutions and to boost confidence in the banking industry. Currently, the fund is financed by member banks at a flat rate of 0.15 per cent of the total deposits per annum.
With the extended deadline, Kenyan lenders will now have until December 31, 2020, to pay their annual deposit insurance premiums.
