Kenyans holding more than Ksh100,000 in small banks are rushing to withdraw their money after three mid-sized financiers were placed under receivership for failing to meet their obligation in 2017.
The mid-sized financiers included; Chase bank, Imperial bank and Dubai bank.
According to the Central Bank of Kenya (CBK), small banks currently control 5.84% of accounts down from 13.26% in 2017.
File image of Kenyan banknotes
Depositers are now depositing their money in larger institutions in a bid to avoid being entangled in financial trouble.
CBK classified 21 small banks as low tier, indicating that the banks had 90,572 quality accounts compared to 210,047 in 2017.
On the other hand, 461,555 accounts rated as the top nine banks added more than 461,555 accounts with more than Ksh100,000 between January 2016 and December 2019.
The Kenya Deposit Insurance and Corporation (KDLC), which is an independent state agency that manages deposit refunds in collapsed banks has been raising refunds for collapsed banks.
KDIC CEO Mohamud Mohamud stated that the corporation’s role was to create a level playing group for all players.
“Our role together with National Treasury and CBK is now to create a level playing group where all banks will be viewed as safe and sound to avert such scenarios of depositors moving money to what they view as large banks.
“The revision of the cover and introduction of risk-based premiums is a way of collapsing the view of banks as small or big and encourage depositots to confidently put money in any bank.”
Kenyan bank notes held in hand.