This archive report was first published on 1 October 2019.
Kenya's commercial banks will begin covering deposits for an estimated 98 percent of customers as from July next year, following amendments to the Kenya Deposit Insurance Act of 2012.
According to Kenya Deposit Insurance Corporation CEO Mohamud A. Mohamud, this is an incentive to depositors to stop keeping money under mattresses or outside conventional banking.
Instead of the current Ksh.100,000 deposit coverage limit, customers will be cushioned for as much as Ksh.500,000.
The move comes after the unprecedented collapse of three lenders - Chase Bank, Imperial, and Dubai Bank - in the past four years, which were attributed to suspect dealings including unsecured insider loans.
Commercial banks will now pay insurance premiums on customer deposits on a risk-based model, with depositors being covered in the event that their lender's operations collapse.
As of June this year, banks reportedly held an estimated total of Ksh.3.4 trillion in customer deposits.
The National Treasury has welcomed the shift in policy, with Treasury CS Ukur Yatani stating that everyone needs to know that their earnings are well secured by the institutions that are mandated to do so.
