Customers at a banking hall. There were 33,291,000 deposit accounts in the banking industry as of last September 2015. PHOTO | FILE
What you need to know:
Study shows that 22.3 per cent of bank accounts were dormant or closed compared to 3.1 per cent in saccos, 2.4 per cent in microlenders and 1.2 per cent for mobile bank account.
One in every five bank accounts has not been operated for over six months, indicating a high exit rate by customers in the banking sector even as financial inclusion in the country rose to 82.5 per cent.
Research by donor-funded Financial Sector Deepening (FSD) Trust Kenya shows 22.3 per cent of bank accounts were dormant or closed compared to 3.1 per cent in saccos, 2.4 per cent in microlenders and 1.2 per cent for mobile bank account.
In terms of financial inclusion, the rise was from 74.7 per cent on the basis of FSD data released in October 2013 — giving a growth of 7.8 percentage points to this year.
“The main reason given for stopping to use a bank account is loss of income source, which underlines the fact that for many, banks are simply used to receive salaries and other livelihood-related payments and are not maintained for other reasons,” reads part of this year’s financial access survey report.
Twenty per cent of the people said they left their bank because it did not meet their needs with another 14 per cent citing hidden charges while 12 per cent attributed their exit to dissatisfaction with services.
An account is declared dormant after six months without owner-initiated activity. Lenders usually demand a fee, averaging Sh500, to be paid for a dormant account to be activated again.
This is the first time that a research has been conducted on dormant accounts in the country.
As per data from the Central Bank of Kenya, there were 33,291,000 deposit accounts in the banking industry as of last September holding Sh2.5 trillion in savings.
The survey found 17.4 per cent of the country’s bankable population were excluded from accessing financial services, an improvement from 25.3 per cent three years ago.
Seven per cent rely on informal services providers such as shylocks, employers and chamas (investment clubs) for their financial needs. Financial inclusion was linked to economic status with 42 per cent of the excluded being among the poorest.
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Note: The results are not exact but very close to the actual.
