MP Sakaja wants depositors paid up to Sh2 million if a bank collapses

Chase Bank customers at a branch when receivership announcement was made

A new Bill seeking to raise by up to 20 times the maximum amount depositors will be paid if a bank collapses, is ready for publication and introduction into the House. The Bill wants the minimum amount the Kenya Deposit Insurance Corporation pays to depositors increased from Sh100,000 to Sh2 million.

Nominated MP Johnson Sakaja has drafted the Kenya Deposit Insurance (amendment) Bill, 2016 which also wants people holding multiple accounts paid up to a maximum of Sh2 million on each of their accounts.

“As currently set, the maximum amount of Sh100,000 does not offer compensation to a significant portion of depositors, especially young people and small and medium-sized enterprises who are likely to be victims of banks collapse,” said Sakaja.
He argues that the Sh100,000 in the law was set in 1985. “When Chase Bank collapsed, hundreds of business owned by the youth were affected, yet the Kenya Deposit Insurance Corporation has billions sitting there. What’s that money for?We should use it to cushion depositors,” he said.

Three banks in Kenya – Chase Bank, Dubai Bank and Imperial Bank have gone down with billions in depositors’ cash.The KDIC has at least Sh54 billion in its accounts to pay depositors in case banks collapse, and at least a million Kenyans have less than Sh100,000 in their bank accounts.