As stipulated by the KDI Act 2012, institutions licensed and regulated by the Central Bank should contribute to KDIC an annual premium of 0.15 % of its total deposits as determined by the corporation.

The amount of contribution should not be less than Kshs. 300,000/= nor exceed 0.4 % of the average of the institution's total deposit liabilities during the period of twelve months.

Member intuitions are required to provide accurate and reliable information/data to KDIC so as to facilitate effective assessment of the premiums.

KDIC may increase the contributions of an institution beyond the prevailing rate when it appears that the affairs of the institution are being conducted in a manner detrimental to its own interests or to the interests of its depositors.   The Corporation shall serve on every institution a notice specifying the amount and the period. The amount should be paid not later than twenty-one days after the date of service of the notice.

An institution that fails to pay its contribution within the period specified in a notice issued shall be liable to pay a penalty interest charge not exceeding one half per cent of the unpaid amount for every day outside the notice period on which the amount remains unpaid.

The Corporation shall not accept any contribution by an institution if reduced or otherwise adjusted on the basis of any claim by the institution against the Corporation.

Arrangements are underway to adopt a risk based premium assessment based on the risk profile and appetite of member institutions.

KDIC has a statutory mandate to provide incentives to Banks for sound risk management. Since its inception as DPFB, the Corporation has been assessing premiums for the deposit insurance scheme on a flat rate basis of 0.15% of the annual average deposits. This model has since fallen short of the risk minimization mandate. To remedy this; the KDIC developed a Risk Based Model dubbed Differential Premium System (DPS). The model is designed to achieve the following objectives:

• To provide incentives for banks to avoid excess risk taking
• To introduce fairness into the premium assessment process
• To mitigate the risk taking incentives created by the deposit insurance scheme

To reduce the cross-subsidy that stronger banks implicitly provided weaker banks under the flat rate premium system

The Risk Based Premium model operates on a simple principle of the “higher the perceived risk the bank has, the higher the Premium to be paid”. Unlike the Flat rate model, the Risk Based Premium model has two components:

The Flat Rate component

The Risk Based Rate component

The risk based rate is based on the Capital Adequacy (C) Asset Quality (A) management (M) Earnings (E) and Liquidity (L) rating, commonly known us CAMEL Rating, of the Bank by CBK. Under this model banks rated low by CBK will pay a risk premium while those rated “strong” will only pay a flat rate. The model aims at rewarding banks with sound risk management without punishing banks that are yet to implement sound risk management.

To fulfill this mandate, the Corporation provides a Deposit Insurance Scheme for member institutions to cater for limited coverage of deposits as provided for by law. The Corporation increased the coverage limit from Ksh 100,000 to Ksh 500,000 with effect from 1st July 2020.

The following Commercial Banks and Microfinance Banks are members of the Deposit Insurance Scheme. 

Failed Member Institutions