Collapsed banks set to double pay
The government extended some relief to bank customers after President Uhuru Kenyatta signed into law the Kenya Deposit Insurance (Amendment) Bill 2020.
The Bill sponsored by Imenti North Member of Parliament Abdul Rahim Dawood will increase compensation to Sh1 million from Sh500,000 in the event a bank collapses.
The compensation is in respect to protected deposits when a banking institution goes into receivership.
Liquidated banks
In the past decade, the sector has witnessed collapse of several banks including Dubai and Imperial Banks in 2015, and Chase Bank a year later.
Dubai Bank has since been liquidated and payments made to depositors while Chase Bank and Imperial Bank had their good loans and deposits transferred to State Bank of Mauritius and KCB Group respectively.
National Bank was also on the verge of collapse before a takeover by KCB reversed fortunes for the government institution.
Other reforms brought by the new law includes capping the waiting period to six months for customers to be compensated once a financial institution collapses.
Initially, the Kenya Deposit Insurance Corporation (KDIC) had opposed the Bill, saying that if passed, it would raise its exposure from Sh130 billion to Sh950 billion.
Good conduct certificate
Even the National Assembly Committee on Finance and National Planning had shot down the Bill amid concerns that nearly Sh1 trillion would be needed to cover for the exposure. However, amendments to the bill enabled a smooth sailing.
The president also signed into law the new Employment (Amendment) Act that provides employers to demand for clearance or compliance certificates “upon granting an offer of employment to a prospective employee.”
Previously, prospective employees were required to avail documents such as certificate of good conduct during job application.
