Kenya is examining an increase in the compensation payable to holders of deposits in banks that fail to 500,000 from 100,000 Kenyan shillings, The East African reported June 5, citing a government source.
The National Treasury and the board of the Kenya Deposit Insurance Corp., are discussing the proposal to raise the current cushion, Geoffrey Mwau, a director at the Treasury, told the newspaper. The current deposit compensation amount covers 90% of deposit-holders but it does not adequately cover the balance who control over 90% of a total of 2.76 trillion shillings in deposits, the newspaper reported.
The review of the compensation amount is an attempt to rebuild consumer confidence in the industry, the newspapers said. Dubai Bank Kenya and Imperial Bank Ltd. failed in 2015, followed a year later by the collapse of Chase Bank (Kenya) Ltd., which led to a significant shift of deposits from small to large lenders.
As of June 7, US$1 was equivalent to 100.87 Kenyan shillings.
