Harsher penalties for rogue bank directors
Business
By
James Anyanzwa
| Jun 26, 2013
By James Anyanzwa
Kenya: The Kenya Deposit Insurance Corporation (KDIC) has been given more powers to punish directors partly or fully responsible for the collapse of banking institutions.
These may include persons who prepare, sign or approve false statements.
According to the Kenya Deposit Insurance Act (2012), the penalty imposed shall not exceed Sh1 million, and where the violation is not remedied, a fine not exceeding Sh50,000 for each day the violation continues.
The Kenya Deposit Insurance Act seeks to strengthen the regulatory framework of KDIC and enhance protection of deposits.
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The new regulations also seek to restructure the Deposit Protection Fund (DPF) by separating its operations from those of CBK, broadening its mandate and giving it more powers to be involved in resolution of bank problems.
“We have therefore set out our strategic roadmap to ensure successful implementation of the new deposit insurance regime,” said CBK Governor and current DPF chairman Njuguna Ndung’u.
KDIC is expected to strengthen Kenya’s financial infrastructure and work together with Central Bank in search of viable solutions for ailing institutions instead of winding them up.
DPF is currently a department of Central Bank and its role is limited to compensation of depositors of collapsed commercial banks.
However, its new functions are expected to inject more confidence in the banking industry and accelerate financial inclusion.
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