Kenyans whose Sh881 million deposits sank when a Moi-era lender, Reliance Bank, collapsed 18 years ago have a year to redeem their monies from the Kenya Deposit Insurance Corporation (KDIC).
In notices published in Thursday’s dailies, liquidation agent Micah Nabori asked individual and corporate accountholders to present evidence to KDIC.
“KDIC will commence distribution of third and fourth payments to all eligible depositors and creditors of Reliance Bank (now in liquidation) who have proved their claims,” it said.
The liquidation agent has also invited creditors whose bills for goods and services were pending prior to September 2000 when the Central Bank of Kenya (CBK) closed the lender to protect depositor funds.
Data available from CBK’s audit indicate the bank had only Sh50 million at hand resulting in a deficit of Sh350 million at the time of closure.
The problem was aggravated by insider lending where directors, shareholders and their related companies loaned themselves Sh470 million, being 43 percent of total loans of Sh1.59 billion that had been dished out. As at June 2017, KDIC had paid out Sh100 million being first and second payments from Reliance Bank’s fund held at the State insurance fund.
A bid to revive the bank via injection of new funds by major depositors and shareholders flopped after shareholders and their companies who benefited from insider loans declined to heed a call to repay the unsecured loans.
KDIC, in its status report of June 2017, said it managed to recover Sh157.5 million by 2017, being a paltry 9.9 percent of the total outstanding loan portfolio of Sh1.59 billion.
The period under review showed that cumulative recovery of debts and realisation of other assets of all institutions placed in liquidation since the ‘90s totalled Sh9.9billion, being interest earned on treasury bills and other recoveries.
KDIC said it has since engaged debt recovery firms to track loan defaulters with a view to seizing their assets to recover debts for the institutions in liquidation.