THE central bank is revisiting its maximum compensation cover for depositors once a bank goes under.
The current maximum cover is 1.5m/- a depositor gets after a bank closure. This amount was revised ten years ago and thus called for revision this time around—upwardly.
BoT’s Deposit Insurance Board acting Director Richard Malisa said on Thursday the experience received after the closure of seven banks in the last two years called for revisiting the amount of compensation.
“We are working on the issue to see whether to increase the compensation amount…the recent experience and the size of the fund call for revisiting the policy,” Malisa told participants of a media seminar organised by BoT.
In 2018, BoT closed five non-performing banks to protect the stability of the banking system.
The institutions were Covenant Bank For Women, Efatha Bank, Njombe Community Bank, Kagera Farmers’ Cooperative Bank and Meru Community Bank.
And in 2017, the central bank revoked the licence of FBME Bank and placed it under liquidation after it was accused by the U S government of largescale money laundering.
The DIS acting Director said the fund size has grown from the initial seed amount of 1.5bn/- in 1994 to 520bn/- at the end of last month.
He attributed this to contribution derived from its 52 members that increased handsomely recently after banks customer deposits grew in size. Members are paying an annual fee of 0.15 per cent of their deposits.
“Top banks customer deposits are now in terms of trillion shillings…this boosted the fund size accordingly,” Mr Malisa said.
Due to fund growth and time intervals since the last increment was awarded, this pushes for hiking the compensation amount northwardly.
For instance, DIS paid almost 10bn/- after the central bank revoked licences of six banks between 2017 and 2018 and still has 520bn/- in its coffers.
Mr Malisa said DIS managed to compensate in full 97 per cent of depositors of five ill-fated banks and 6 8 per cent of FBME Bank.
“This means we manage to pay fully all depositors of the six banks who had 1.5m/- or less in the six ill-fated banks. The remaining 3.0 per cent are awaiting the liquidation process,” he said.
The ceiling of compensation amount in 1994 when DIS started was 250,000/-, in 2003 was 500,000/- and 1.5m/- from 2010 to date.
In recent days, depositors have been complaining that the amount of compensation was little compared to the money left on the account and are praying for hiking the size of money offered once a bank goes under
