The Kenya Deposit Insurance Act

Part I – PRELIMINARY

1. Short title

This Act may be cited as the Kenya Deposit Insurance Act.

2. Interpretation

(1) In this Act, unless the context otherwise requires— "associate" has the meaning assigned to it under the Banking Act (Cap. 488); "Board" means the Board of Directors constituted under section 7; "Cabinet Secretary" means the Cabinet Secretary for the time being responsible for matters relating to finance; "Central Bank" means the Central Bank of Kenya established under the Central Bank of Kenya Act (Cap. 491); "chairperson" means the chairperson of the Board appointed under section 7; "Chief Executive Officer" means the chief executive of the Corporation appointed under section 10; "company" has the meaning assigned to it under the Companies Act (Cap. 486); "Corporation" means the Kenya Deposit Insurance Corporation established under section 4; "deposit" means the unpaid balance of the aggregate of deposits received or held by a member institution from or on behalf of a person in the usual course of the business of deposit taking and shall include— (a) a bank draft, certified cheque or other similar instrument or payment instruction, drawn or made against a deposit account for which the member institution shall be primarily liable; (b) a cheque entered into a payment system notwithstanding any delay or failure by the member institution in crediting the payee’s account; or (c) any other liability or financial instrument as may be specified by the Corporation but excludes— (i) a deposit that is not payable in Kenya; (ii) bearer negotiable instruments of deposit; (iii) any sum of money payable under a repurchase agreements; (iv) interbank transactions; and (v) any other liability or financial instrument as may be specified by the Corporation; "depositor" means a person whose account has been or is to be credited in respect of monies constituting a deposit; "exclusion and transfer process" means the process that commences when the Corporation is appointed receiver and or assumes control of a problem institution and shall consist of— (a) exclusion and transfer of part or total deposits and liabilities from a problem institution to another solvent and well-managed institution; (b) exclusion and transfer of part or total assets to the institution receiving the liabilities; and (c) liquidation of the residual assets and liabilities; "Fund" means the Deposit Insurance Fund established by section 20; "institution" means a bank, financial institution or mortgage finance company as defined in the Banking Act (Cap. 488), or a microfinance bank as defined in the Microfinance Act (Cap. 493C), or any other deposit taking entity licensed by the Central Bank; "insured deposit" means the deposit or any part of the deposit the repayment of which is insured by the Corporation under this Act; "lesser cost rule" means the adoption of the lower of— (a) the cost to the Corporation of payment of insured deposits in liquidation of an institution; and (b) the cost to the Corporation in undertaking the exclusion and transfer process; "liabilities" includes debts, duties and obligations of every kind, whether present or future, or whether vested or contingent; "officer", in relation to a member institution, means a person who manages an institution and includes the chief executive officer, deputy chief executive officer, chief operating officer, chief financial officer, secretary to the board of directors, treasurer, chief internal auditor, manager of a significant unit of an institution or a person with a similar level of position or responsibility; "person" shall include incorporated, unincorporated and natural persons; "problem institution" means any institution that places the interest of its depositors or the banking sector at risk; "property" means any movable or immovable property and includes— (a) any right, interest, title, claim, power or privilege, whether present or future, or whether vested or contingent, in relation to any property, or which is otherwise of value; (b) any conveyance executed for conveying, assigning, appointing, surrendering, or otherwise transferring or disposing of property where the person executing the conveyance is the proprietor or possessor, or wherein he is entitled to a contingent right, either for the whole or part of the interest; (c) any security, including any stock, share, debenture, bonds, loan stocks, transferable subscription rights or warrants; (d) any negotiable instrument, including any bank note, bearer note, treasury bill, dividend warrant, bill of exchange, promissory note, cheque and negotiable certificate of deposit; (e) any mortgage or charge, whether legal or equitable, guarantee, lien or pledge, whether actual or constructive, letter of hypothecation or trust receipt, indemnity, undertaking or other means of securing payment or discharge of a debt or liability, whether present or future, or whether vested or contingent; and (f) any other tangible or intangible property; "securities" has the meaning assigned to it by section 2 of the Capital Markets Act (Cap. 485A); "security" includes a mortgage or charge, whether legal or equitable, debenture, bill of exchange, promissory note, guarantee, lien or pledge, whether actual or constructive, letter of hypothecation, indemnity, undertaking and other means of securing payment or discharge of debt or liability, whether present or future, or whether vested or contingent; "share" means share in the share capital of a company and includes stock except where a distinction between stock and shares is expressed or implied; "subsidiary" has the same meaning as defined under section 5 of the Companies Act (Cap. 486); and "systemic risk"means the possibility of a failure of one or more institutions which may cause severe disruptions in the financial system; "trust accounts" includes monies held on account for the purpose of a trust. (2) Spent.

3. Act to prevail

Where there is any conflict or inconsistency between this Act and the provisions of any other Act in matters relating to the purpose of this Act, this Act shall prevail.

Part II – THE KENYA DEPOSIT INSURANCE CORPORATION

4. Establishment of the Corporation

(1) There is established a corporation to be known as the Kenya Deposit Insurance Corporation. (2) The Corporation shall be a body corporate with perpetual succession and a common seal and shall in its corporate name, be capable of— (a) suing and being sued; (b) taking, purchasing or otherwise acquiring, holding, charging, leasing or disposing of moveable or immovable property; (c) borrowing money; and (d) doing or performing all such other acts necessary for the proper performance of its functions under this Act which may lawfully be done or performed by a body corporate. (3) The headquarters of the Corporation shall be in Nairobi.