Kenya Deposit Insurance Corporation

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.[3]

For other uses, see KDIC (disambiguation).
Kenya Deposit Insurance Corporation (KDIC)
Agency overview
Formed2012 (2012)
JurisdictionGovernment of Kenya
HeadquartersUAP Old Mutual Towers
Upper Hill, Nairobi
Kenya
Employees50 (2020)[1]
Agency executive
  • Mohamud Mohamud[2],
    Chief Executive Officer
Parent agencyCentral Bank of Kenya
Websitewww.depositinsurance.go.ke

History

At the time KDIC was established in 2012, 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.[3]

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.[4]

Staffing

Following the hiring of a new CEO, KDIC is in the process of in its own staff, moving to its new premises and ceasing to depend on CBK staff. As of February 2020 KDIC employed 50 people, with the expectation to have 70 employees by mid 2020, and a total of 160 staff members by 2022.[1]

Recent interventions

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 the CBK, on account of “serious cash-flow problems”. KDIC was called in to refund customer deposits.[5] KDIC has recommended liquidation of the bank.[6]
  • 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.[7] 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.[8]
  • In April 2016, Chase Bank Kenya failed and was placed under receivership by the Central Bank of Kenya, prompting KDIC to step in.[9] 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.[10]

Location

KDIC's headquarters are located at UAP Old Mutual Towers, Upper Hill, Nairobi.[1]

See also

References
  1. Patrick Alushula (7 February 2020). "Depositors' insurer nears split from Central Bank". Business Daily Africa. Nairobi. Retrieved 7 February 2020.
  2. Irungu, Geoffrey (26 June 2016). "Deposits insurer mulls new fund following recent bank failures". Business Daily Africa. Nairobi. Retrieved 27 June 2016.
  3. Goitom, Hanibal (16 May 2012). "Kenya: Kenya Deposit Insurance Bill Becomes Law". Washington DC: Library of Congress. Retrieved 23 June 2016.
  4. Ngigi, George (12 August 2014). "Deposit insurance fund hived off Central Bank of Kenya (CBK)". Business Daily Africa. Nairobi. Retrieved 23 June 2016.
  5. BDA Reporter (14 August 2015). "Dubai Bank Kenya placed in receivership for a year". Business Daily Africa. Nairobi. Retrieved 23 June 2016.
  6. Olingo, Alan (24 August 2015). "Central Bank of Kenya names liquidator for Dubai Bank". The EastAfrican. Nairobi. Retrieved 23 June 2016.
  7. George Ngigi, and Brian Ngugi (13 October 2015). "Central Bank of Kenya puts Imperial Bank under statutory management". Daily Nation. Nairobi. Retrieved 23 June 2016.
  8. Anyanzwa, James (21 June 2016). "NIC to compensate Imperial Bank depositors in new deal". The EastAfrican. Nairobi. Retrieved 23 June 2016.
  9. The EastAfrican (7 April 2016). "Kenya: Chase Bank Put Under Receivership". Nairobi: The EastAfrican via AllAfrica.com. Retrieved 23 June 2016.
  10. Irungu, George (20 April 2016). "KCB to take over management of Chase Bank, will reopen next week". Business Daily Africa. Nairobi. Retrieved 23 June 2016.

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