Formed 2012 Parent agency Central Bank of Kenya Headquarters Nairobi | Jurisdiction Government of Kenya Website Homepage Founded 2012 | |
 | ||
Agency executive Mohamud Mohamud,
Chief Executive Officer | ||
Kenya deposit insurance corporation is raising alarm over failure of depositors to claim their cash
The Kenya Deposit Insurance Corporation (KDIC) is a Kenya government corporation providing deposit insurance to depositors in Kenyan banks and deposit-taking microfinance institutions.The KDIC was created by act of parliament in May 2012.
Contents
- Kenya deposit insurance corporation is raising alarm over failure of depositors to claim their cash
- Location
- Overview
- Recent events
- References
Location
KDIC's headquarters are located at 1st Floor, CBK Pension House, Harambee Avenue, in Nairobi, Kenya, capital and largest city.
Overview
At the time KDIC was established, it was an integral part of the Central Bank of Kenya, the country's central bank and banking regulator. The law also established the Deposit Insurance Fund (the Fund), replacing the Deposit Protection Fund. KDIC, by law is mandated to administer the Fund, by collecting contributions for the Fund from member institutions; and holding, managing, and applying the Fund. The KDIC also is mandated to receive, liquidate, and wind up institutions for which it is the designated receiver or liquidator, a function previously overseen by the Central Bank of Kenya. The KDIC Act mandates the Central Bank to appoint the KDIC as the sole and exclusive receiver of a member institution when (a) the institution's obligations to creditors exceed its assets (b) deliberately violates a regulatory or supervisory order (c) fails to provide necessary access to inspectors or lacks general transparency (d) is unable to meet any of its financial obligations, either now or in the near future (e) engages in activities that violate any of the country's laws.
In 2014, the law was amended and KDIC became separated from the Central Bank. KDIC collects a flat rate fee of 0.15 percent of all deposits from each member institution, adjustable at the discretion of KDIC. It also collects an additional fee based on the risk-adjusted percentage of their total deposit liabilities during the previous twelve months as calculated by KDIC.
Recent events
As at June 2016, KDIC has been called in to intervene, three times, by the Central Bank of Kenya, when member financial institutions fell foul of Kenya's banking laws and regulations, during the previous twelve months.
- In August 2015, Dubai Bank Kenya, was placed under receivership by he CBK, on account of “serious cash-flow problems”. KDIC was called in to refund customer deposits. KDIC has recommended liquidation of the bank.
- In October 2015, Imperial Bank Kenya failed due to “unsafe and unsound business conditions to transact business” that existed in the bank. KDIC was instructed to intervene by CBK. In June 2016, CBK agreed with NIC Bank to take over the 28 branches and all 470 former employees of Imperial Bank once the outstanding litigation is resolved.
- In April 2016, Chase Bank Kenya failed and was placed under receivership by the Central Bank of Kenya, prompting KDIC to step in. Three weeks later, KCB Bank Kenya Limited was appointed receiver-manager of Chase, with all branches re-opening on 27 April 2015, under KCB oversight.