Kenya increases bank deposits cover
A new institution is about to be created in Kenya to increase the protection of client deposits at bank and microfinance institutions.A new institution is about to be created in Kenya to increase the protection of client deposits at bank and microfinance institutions.
Public consultations on draft regulations to establish an autonomous state agency - the Kenya Deposit Insurance Corporation (KDCI) - started on Tuesday (March 19th) in the capital Nairobi, and are expected to go on for the next two months.
"Our objective is to transform our current 'pay box' scheme to a problem bank resolution mechanism that will be more responsive in addressing risks and threats to the financial system," said Central Bank governor Njuguna Ndungu, quoted by The Star.
Under the new deposit protection plan, banks will have to pay a certain premium to the corporation periodically depending on their individual risk exposure.
The KDCI will provide deposit insurance to banks and will be required to make payments to depositors should a bank or a microfinance institution collapse.
The reforms, the Central Bank said, will align the new deposit scheme to international best practices.