Kenya has spared small and weaker banks from paying increased premiums to the deposit insurance fund for one year amid Covid-19 pandemic that has adversely affected the cash flow positions of both regional and global lenders.
As part of measures to support the economy and the banking industry during this difficult period caused by Covid-19 impact, the Kenya Deposit Insurance Corporation (KDIC) has suspended the implementation of the risk-based premium model by one year and gave banks a six-month grace period to pay their annual premiums.
KDIC has also enforced the revised deposit insurance coverage limit of Ksh500, 000($5,000) from Ksh100, 000 ($1,000), effective July 1, whose implementation had been deferred last year.
The deposit insurance fund, run by KDIC, was created to compensate depositors of collapsed institutions and to boost confidence in the banking industry that had been rocked a by a series of bank failures in the 1980s and early 1990s.
Kenyan lenders are required to pay the annual deposit insurance premiums in the month of July every year but with the extended deadline the payments will now be due on December 31 2020.
