What is KDIC?
KDIC is a corporation established under the Kenya Deposit Insurance Act, 2012, which provides for the establishment of a deposit insurance scheme and a corporation to manage the scheme and to wind up failed deposit taking institutions, among other things. This Act establishes a Deposit Insurance Fund (the Fund) to replace the Deposit Protection Fund governed by the Banking Act of Kenya (as amended 2009).
What is the role of KDIC in the financial system?
To promote public confidence and contribute to the stability of the Kenyan financial system.
What is a Deposit Insurance Scheme?
A deposit insurance Scheme is a financial guarantee that instills confidence and protects depositors in the event of a bank/deposit taking financial institution failure and to offer a measure of safety for the banking system.
Who manages KDIC?
KDIC is a state corporation managed by the Board of Directors which consists of:
- Non-executive chairperson appointed by the President on the recommendation of the Minister from amongst the members appointed under paragraph (d);
- The Permanent Secretary in the Ministry for the time being responsible for matters relating to finance or his representative;
- The Governor of the Central Bank of Kenya or his representative;
- Five independent members, not being public officers, appointed by the Minister at the National Treasury
- Chief Executive officer of Kenya Bankers Association, and
- the CEO, who is ex-officio member
What is a member institution?
All banks, financial institutions, mortgage finance companies (defined under the Banking Act), and deposit-taking microfinance institutions (defined under the Microfinance Act) licensed by the Central Bank of Kenya will automatically become members of the Fund.
How does KDIC protect a depositor of a member institution?
It is a cover that safeguards depositors against loses they would otherwise incur if a bank or deposit taking institution closes its operations. Depositors are entitled to claim an amount of Ksh. 100,000 or less which is currently set for review.
How does a depositor recover deposits in excess of the insured amount of KShs. 100,000.00?
This is paid as liquidation dividend after the liquidator has recovered sufficient funds from the sale of the institution's assets and recovery of debts.
Who pays the insurance premium?
Any institution licensed by the Central Bank shall become a member of the Fund from the date it is granted the licence.The member institution pays the premium to the KDIC at no cost to the depositor.
Which deposits are insured by KDIC?
All deposits in current accounts, savings accounts and time/fixed deposit accounts are insured.
I am a non resident of Kenya, are my deposits held with member institutions in Kenya insured?
Yes, all depositors are paid regardless of their place of residence or nationality.
What if I have several accounts in the same institution?
All accounts of each depositor in an institution are consolidated and paid up to the maximum insured sum of KShs. 100,000.00.
In the event that a joint account exists in addition to individuallly owned account in the same insured institution, is each account separately insured?
A joint account is considered as being distinct from individually owned accounts and is therefore insured separately.
Are accounts held in trust, executor, guardian or custodian insured separately from an individual's account?
Yes, these are treated as distinct from individually owned accounts and therefore insured separately.
Are creditors of institutions insured?
No, however, they are entitled to participate in the payment of liquidation dividends.
Is an account held by a limited liability company or a partnership insured separately from the individual accounts of shareholders or partners of those entities?
Yes, these are different entities and they are treated separately for purposes of insurance.
What happens if my bank is 'bought out' or merged with another member bank?
The deposit insurance coverage is retained in the name of the new institution.
What happens when a member institution fails?
CBK appoints KDIC as the receiver and the corporation publishes a notice of the institution's failure and advises depositors on the claim procedures.
How many institutions are currently under liquidation?
17 institutions are currently under liquidation.