Kenyans with multiple accounts in collapsed banks will now receive full compensation for each account, according to a new directive by the Central Bank of Kenya (CBK) and the Kenya Deposit Insurance Corporation (KDIC). This move is expected to provide much-needed relief to depositors who previously faced compensation limits per person, regardless of how many accounts they held.
New Compensation Policy
Previously, KDIC – the body responsible for protecting depositors’ funds – had a compensation limit of KSh 500,000 per depositor when a bank collapsed. This meant that if a person had multiple accounts in the same failed bank, they would only receive a maximum of KSh 500,000 in total. However, under the new policy, the compensation limit will now apply per account, ensuring that depositors recover more of their savings.
The decision comes in response to growing concerns from depositors who suffered massive losses after recent bank failures, such as Imperial Bank, Chase Bank, and Dubai Bank. Many account holders had spread their funds across different accounts, hoping to safeguard their money, only to realize that KDIC’s previous policy treated them as a single depositor.
Impact on Depositors
With this change, individuals and businesses who maintained multiple accounts in collapsed banks can now expect higher payouts. This will especially benefit:
- Small and Medium Enterprises (SMEs) that had separate business and personal accounts.
- Salaried employees with multiple savings or salary accounts.
- Investors and large depositors who had diversified their funds within the same bank.
For example, if a depositor had three accounts in a failed bank, each holding over KSh 500,000, they will now receive KSh 1.5 million instead of just KSh 500,000.
Government’s Efforts to Strengthen Banking Confidence
The Kenyan banking sector has faced a series of bank failures over the past decade, eroding public confidence in the financial system. The CBK and KDIC have been working on reforms to enhance deposit protection and stabilize the sector.
CBK Governor Dr. Kamau Thugge emphasized that this new policy is part of broader efforts to protect depositors and promote financial stability. He urged depositors to ensure their funds are in institutions that are fully licensed and regulated to avoid unnecessary risks.
Meanwhile, KDIC has also been pushing for an increase in the overall deposit insurance limit, which could further improve protection for bank customers in the future.
What Next for Depositors?
With this new compensation rule, Kenyans with multiple accounts in collapsed banks can now breathe a sigh of relief. However, financial experts advise depositors to remain cautious and diversify their savings across different banks, rather than just different accounts within the same institution.
As the CBK and KDIC continue to enhance banking regulations, depositors should stay informed about their rights and ensure they bank with financially sound institutions.
This policy shift marks a significant step toward restoring confidence in Kenya’s banking sector, ensuring that depositors receive fair compensation for their hard-earned money. While the risk of bank failures may never be eliminated, the government’s commitment to deposit protection provides a more secure financial future for Kenyans.