This archive report was first published on 30 June 2021.
As of tomorrow, Kenya Deposit Insurance Corporation (KDIC) will implement a risk-based premium assessment for commercial banks.
This new model will see banks pay additional premiums to the deposit authority based on their risk perception.
The risk-based premium assessment incorporates a standard flat rate of 0.15% of deposits held by each lender, plus an additional factor based on the new risk model.
According to the Deposit Authority, the total premiums will be capped at a maximum of 0.25% for each party.
Speaking on the new model, KDIC Managing Director Muhamud Muhamud stated that it will end bank failures by requiring lenders to adopt prudent practices and shun enormous appetites for risk.
The new pricing mechanism on banking premiums aligns with the enhanced payout to depositors with deposits in Charterhouse and Chase Bank, up to a maximum of KSh 500,000.
