This archive report was first published on 5 July 2020.
On July 1, 2020, the Kenya Deposit Insurance Corporation (KDIC) enforced a revised deposit insurance coverage limit of Ksh500,000 ($5,000), up from Ksh100,000 ($1,000), as part of measures to support the economy and the banking industry during the Covid-19 pandemic.
As the pandemic has adversely affected the cash flow positions of both regional and global lenders, KDIC has suspended the implementation of the risk-based premium model by one year. This decision aims to give banks impacted by Covid-19 a breathing space to put their books in order.
‘The future is to ensure no bank failures in Kenya and in the unlikely event of a problem bank, prompt resolution methods shall be employed with the least disruption to depositors and the banking sector at large,’ Chief Executive Mohamud Ahmed Mohamud told reporters in Nairobi on Tuesday.
Kenyan lenders are required to pay the annual deposit insurance premiums in the month of July every year, but with the extended deadline, the payments will now be due on December 31, 2020.
Currently, the deposit insurance fund, run by KDIC, is financed by member banks at a flat rate of 0.15 per cent of the total deposits per annum. However, KDIC, in collaboration with the Central Bank of Kenya and the National Treasury, agreed on a new payment model based on the risk-profiles of individual banks.
