The Kenya Deposit Insurance Corporation (KDIC) has unveiled proposals to strengthen depositor protection by doubling the compensation limit to KSh1 million per depositor, up from the current KSh500,000, in the event of bank collapse.
In a public notice, KDIC explained that the review seeks to adjust the maximum guaranteed payout to reflect current realities in the financial sector.
“The review of the coverage limit aims to adjust the maximum guaranteed amount payable to a depositor in the unfortunate event of a bank failure,” the Corporation stated.
Alongside the revised coverage limit, KDIC has drafted two additional frameworks: the Kenya Deposit Insurance (Contribution by Institutions) Regulations, 2026 and the Kenya Deposit Insurance Guidelines (Trust Account), 2026. The agency is now inviting stakeholder feedback before finalising the reforms.
KDIC, which is mandated to provide deposit insurance for customers of member institutions and promote financial stability, stressed that the proposals are anchored in constitutional and statutory requirements for public participation in law-making.
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Under the draft contribution regulations, financial institutions will be assessed based on their risk profiles, a move aimed at encouraging stronger risk management practices across the banking sector. The trust account guidelines, meanwhile, are designed to enhance governance of deposit-related trust accounts, covering record-keeping, reporting, and claims processing in the event of bank failures.
If adopted, the new framework would bring nearly all bank accounts within the insured threshold, offering greater protection to small depositors. However, KDIC acknowledged that the expanded coverage could place additional strain on the deposit insurance fund, echoing concerns raised in past discussions on similar proposals.
Stakeholders have until May 31, 2026, at 5:00 pm to submit their views.
By Masaki Enock
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