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Business: Liquidation of Daima, Trust Bank and Fortune Finance reach homestretch

BUSINESS
By -jackson okoth | January 15th 2014

By Jackson  Okoth

 

Big depositors and creditors, who lost out when Daima Bank Limited was liquidated, have one month to make their claims from the Deposit Protection Fund (DPFB)

Dividend payments for depositors of Daima Bank, which began on February 25, 2013, will close on February 25, 2014. Payments to customers of Trust Bank and Fortune Finance, also under liquidation, will close on December 2, 2014. The Deposit Protection Fund Board (DPFB) has been running adverts appealing for all those depositors who have never appeared for payments to come forward.

Data from the board puts the number of institutions that are currently under liquidation at 17. So far, the DPFB has successfully wound up seven out of 24 institutions, which have been placed under liquidation.

Section 35 of the Banking Act mandates the Central Bank of Kenya (CBK) to appoint DPFB as the sole liquidator of an institution that has become insolvent. The Fund pays Sh100,000 to those depositors with more than this amount immediately the institution is placed under liquidation. Those with balances in excess of the guaranteed sum of Sh100,000 are entitled to receive liquidation dividends based on the value of recoveries and proceeds from sale of the institution’s assets.

The first institution to be placed under liquidation was Post Bank Credit on May 20, 1993, while the latest is Euro bank, which wound down in 2003.

Dividend payments for Daima, Trust Bank and Fortune are entering the tail end as a new law that will increase the amount paid to depositors is to set to become operational.

“We will review the deposit insurance coverage, which has remained constant since it was set in 1989 when the deposit insurance system was established,” said CBK Governor, Njuguna Ndung’u.

Ndung’u was speaking last year during a workshop organised to draft a legal framework that will be used to operationalise the Kenya Deposit Insurance Act 2012.

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