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Banks face higher deposit insurance costs in new plan
The proposed improved coverage is not directly related to the DPS model, but is seen as positive to banking sector customers by improving risk management in the institutions.
Premiums paid by banks toward the insurance of customer deposits will now factor risks linked to fluctuating interest rates, foreign exchange rates, and commodity or equity prices as part of a proposed strategy aimed at improving the lenders’ preparedness against threats.
New draft regulations by the Kenya Deposit Insurance Corporation (KDIC) seek to enhance the existing risk-based premium model, which has been in use since July 2021, and where banks pay for their contributions to the deposit insurance fund based on their different risk levels.
