The Kenya Deposit Insurance Corporation (KDIC) has deferred the implementation of the risk based premium model used in assessing the premium payable by banks to cover customer deposits to July 2021.
In a statement issued Tuesday, the bank deposits insurer said the move is set to support member institutions through shocks brought about by the Covid-19 pandemic.
“In support of our member institutions during these unprecedented times which have impacted on their cash flows, the corporation has postponed the implementation of the model by one more year. This will allow member institutions to recover post Covid-19,” said KDIC.
The planned rolled out of the risk based premium would have seen banks raise their contribution of funds to the customer deposits cover held by KDIC by aligning individual bank funding to the kitty by risks taken on.
The KDIC has however retained its planned roll out of an increased coverage limit effective July 1 from Ksh.100,000 to Ksh.500,000.
The new limit gives more protection to depositors by assuring they can recover the sum of Ksh.500,000 in deposits in the eventuality of a bank failure.
The new coverage ensures that 98 percent of bank customers have all their monies insured and comes on the back of the unprecedent collapse of three banks over the past five years including Chase, Imperial and Dubai bank.
The new risk based premium model was geared at instilling prudency in the undertaking of risks by banks where banks taking on lower risks are to see an accompanying low premium charge.
In further support to banks, the KDIC has extended the annual premium payment period by banks to December.
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