HTTP 200 OK
Allow: GET, POST, HEAD, OPTIONS
Content-Type: application/json
Vary: Accept
{
"count": 1608389,
"next": "http://info.mzalendo.com/api/v0.1/hansard/entries/?format=api&page=368",
"previous": "http://info.mzalendo.com/api/v0.1/hansard/entries/?format=api&page=366",
"results": [
{
"id": 3661,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/3661/?format=api",
"text_counter": 506,
"type": "speech",
"speaker_name": "Mr. Kenyatta",
"speaker_title": "The Deputy Prime Minister and Minister for Finance",
"speaker": {
"id": 168,
"legal_name": "Uhuru Muigai Kenyatta",
"slug": "uhuru-kenyatta"
},
"content": "In 1999, the Board commenced operations and the Central Bank made available such facilities and services for the proper and efficient exercise of the functions of the Board as provided for by the Banking Act. Therefore, administrative services for the Board have continued to be provided by the CBK. The mandate of the Deposit Protection Fund Board (DPFB) is summarized under the following core objectives:- (a) To provide a viable deposit insurance scheme for customers or member institutions. (b) To liquidate and wind up operations of any insolvent institution in which the DPFB is appointed liquidator. (c) To prudently hold, manage and apply funds and levy contributions for the Fund for member institutions. Madam Temporary Deputy Speaker, the Deposit Protection Fund (DPF) is managed by a Board with the Governor of the Central Bank as the Chairman. As I have mentioned, the CBK currently provides personnel who manage the operations of the DPFB. The DPFB, therefore, operates administratively as a department of the CBK. This arrangement compromises the independence of the Board in carrying out its activities and operations, thereby exhibiting operational and legislative weaknesses. As such, the present arrangement is not aligned to international standards for a deposit insurance scheme. The current mandate of the DPFB is limited in scope and, hence, does not give the Board the latitude to intervene effectively and promptly in problem bound resolution process as is currently undertaken in other jurisdictions whose deposit insurance schemes are aligned to international best practice. It is against this background that the CBK appointed a taskforce in March, 2006, to examine the legislation currently in place, governing the DPFB operations to assist in the preparation of a draft Bill that will ensure an effective legal framework, provide for autonomy, enhance corporate governance and expand the mandate of the DPFB. The main objectives of the Kenya Deposit Insurance Bill, 2011, are as follows:- The Bill intends to align the deposit insurance policy and operations to international best practices in order to attain efficiency and effectiveness in discharging its mandate. As mentioned earlier, the DPFB is currently established as a statutory body under the Banking Act, Cap.488 and operates as a department of the CBK. This is pursuant to the current legal framework which mandates the CBK to make available to the Board such facilities and services or such officers as are necessary for the functioning of the Board. The Bill establishes the Kenya Deposit Insurance Corporation as an independent body and grants it mandate, powers and obligations that will enable it to operate effectively within the current and emerging challenges in the financial sector. The Corporation will be a body corporate with perpetual succession, common seal, with the power to sue and be sued and enter into contracts. The corporation shall set its own operational budgets and procedures that shall finance any reimbursements. With regard to enhancing corporate governance, this Bill provides for the independent Board of the corporation that comprises the Permanent Secretary, Treasury, the Governor of the CBK and not more than five members with specific qualifications. The Bill provides for a non-executive Chairman and the Chief Executive Officer shall be an ex-officio member of the Board. The Board of Directors is mandated to ensure that the corporation is managed and run to achieve its objectives and to ensure effective and efficient internal controls and risk management policies. The DPFB is currently not involved in problem resolution of member institutions. The DPFB is engaged when an institution is completely insolvent and the CBK appoints the DPFB as a liquidator. The DPFB pays the protected deposits, liquidates and winds up the collapsed institutions. The DPFB’s role is, therefore, limited to a pay box system. The Bill, therefore, proposes to enhance the Board’s role from that of a pay box to a safety net player that will be involved in problem bank resolutions, in close consultations with the CBK and the Ministry of Finance. The Bill contains provisions for prompt corrective action to resolve any problems in an institution which places interest of its deposit or the banking sector at risk. Prompt corrective action shall, however, be taken in consultation with the CBK. The corporation will, therefore, take a more active role in financial stability. The Bill empowers the Board to make rules, regulations, guidelines as may be necessary, to expedite in relation to the administration, management, control, business, assets and affairs of the corporation and for carrying out and achieving the objectives and purposes of the Bill as enacted. The rules, regulations and guidelines will ensure the corporation keeps abreast with the dynamics of the financial sector to enhance financial stability and to create public confidence in the banking sector. The rules, regulations and guidelines will, therefore, ensure that the corporation effectively plays its role as a safety net player to maintain a stable and efficient deposit insurance system to support the financial system. Allow me to give the following highlights on parts of the Bills. Part I provides for the preliminary matters focusing on the short title, commencement and interpretation of the terms used in the Bill. Part II provides for the establishment, powers and functions of the Kenya Deposit Insurance Corporation. Part III contains financial provisions in respect of the corporation. Part IV establishes the Deposit Insurance Fund, vests the Fund with the corporation. The Fund shall consist, among others, of monies contributed by institutions licensed under the Banking Act, the deposit taking micro-finance institutions licensed under the Micro Finance Act of 2006 and interest or penalties levied in respect of such contributions and income that may accrue to the Fund from its investments. Part V provides for an examination of institutions. Clause 40 empowers, for example, the Corporation to request the CBK to undertake an inspection of a member institution and to avail the information so often to the Corporation while Clause 41 provides for a special examination of a member institution by the Corporation in exigent circumstances. Part VI provides for the receivership, liquidation and winding up of member institutions while Part VII provides for offences under the Act. Part VIII contains miscellaneous provisions relating to acquisition, preservation and disposal of assets, co- operation with other law enforcement agencies, exemption from tax, exemption from levy, an attachment, issuance of regulations, repeal of relevant sections under the Banking Act which touch on the DPFB and the transitional arrangements. The transitional arrangements relate to amongst other things the vesting of assets and liabilities of the DPFB in the Corporation and vesting of the assets of the institutions in liquidation in the Corporation as well as the secondment of current staff working under the DPFB to the Corporation. The Schedule contains revisions as to the conduct of business and affairs of the Board of the Corporation. With these few remarks, I beg to move and request hon. Kimunya to second the Bill."
},
{
"id": 3662,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/3662/?format=api",
"text_counter": 507,
"type": "speech",
"speaker_name": "Mr. Kimunya",
"speaker_title": "The Minister for Transport",
"speaker": {
"id": 174,
"legal_name": "Amos Muhinga Kimunya",
"slug": "amos-kimunya"
},
"content": " Thank you, Madam Temporary Deputy Speaker. I rise to second this Kenya Deposit Insurance Bill which comes in as part of the major reforms that have been taking place within the financial sector. I am happy to see that the journey that this reform began in March, 2006, when I was at the Treasury is almost coming to an end in terms of the amendments that are required to ensure that all depositors are properly protected within the law in the unlikely event that the bank should go under. We had a lot of those examples in the 1990s when the banks would just collapse and the maximum that people would be compensated for was Kshs100, 000. This obviously took ages and with the bureaucracies involved, even accessing this money was a problem. Some of the people who lost their money are still struggling to see if they can get their money or not. By capturing all these things, putting them into a legal framework and giving independence to the Deposits Insurance Corporation, at least, things can be expedited and part of the bureaucracy will be cut off."
},
{
"id": 3663,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/3663/?format=api",
"text_counter": 508,
"type": "speech",
"speaker_name": "Mr. Kimunya",
"speaker_title": "The Minister for Transport",
"speaker": {
"id": 174,
"legal_name": "Amos Muhinga Kimunya",
"slug": "amos-kimunya"
},
"content": "Madam Temporary Deputy Speaker, as we celebrate these reforms, Kenyans need to be patting themselves on the back. The world has just gone through a huge process; it started in 2008 with the collapse of some of the biggest banks that were termed “reputable”. They failed and some of them had to be bailed out expensively by the governments in the USA, the UK and elsewhere in Europe. Some countries ended up bankrupting their own economies; examples were in Iceland and Ireland. Those countries are still reeling from the effects of the banking failures that took place. In Kenya, we did not witness any of the banks failing despite the global recession. This shows that the reforms that have been put in place, especially from 2003, certainly under the Kibaki administration, have been working. Madam Temporary Deputy Speaker, Sir, part of the reasons for the failure of banks was political interference. We saw monies from public bodies such as the National Social Security Fund (NSSF) and the National Hospital Insurance Fund (NHIF) transiting through some of these banks. The money would be withdrawn and given out as loans or cash handouts to politically connected people; of course, these people were not expected to pay back the money. The long and short of it is that when you default in payment, the bank will collapse with all the money that the depositors have put in it. I must say that we must be happy that because this is not happening under the Kibaki administration, banks and public money have been saved. The best way of capturing these things in the future is looking at the best practices and anchoring them in the law. This is what I want to see happening; we should capture some of these things in the law, so that their existence is not based on the good behaviour of the Government of the day; they should be something in respect of which there is a law to protect things like deposits and ensure that everybody does the same thing consistently. Madam Temporary Deputy Speaker, Sir, the other thing that I want to mention is that, given the political turmoil that has been going on within the banking sector, the fact that most of the banks are still holding on is a credit to the Kenyan people. Even when they take loans, they honour their obligations. It is something that our people forget. They fear going to the banks to take loans because of what happened in the past, when they saw people’s properties being auctioned. By and large, Kenyan people are very creditworthy. I would like to encourage them, since this kind of insurance is coming into being. I hope that at some point in time, we will increase the amount of funds that will be covered beyond the Kshs100,000, so that we can encourage the culture of saving. More importantly, savings in a bank cannot grow the economy. I encourage people to borrow money, so that we can develop this economy, and because we know that people will continue meeting their obligations. We see this happening not just at the banks. Even at the very basic levels, within the Savings and Credit Co-operative Societies (SACCOS), people save little amounts of money, which are lent out to others. Even without providing security, people pay up their obligations, and the economy can grow. Madam Temporary Deputy Speaker, it is because of those little savings and borrowings that you see civil servants at relatively low levels owning buildings like Harambee Plaza. These are multibillion investments. This gives an indication of the potential that we have in this country in terms of mobilisation of savings and people borrowing. All they really need is the faith that comes with legal reforms in areas like the banking sector. We are creating this deposits insurance scheme within the law, but outside the Central Bank of Kenya, so that the sector can have its own way of doing things. It can intervene when some of the financial organisations get into problems. It should not just be looked at as a pathologist who comes in after the event and says: “Things are bad. We want to sell you and pay all the people.” It will come in to help in terms of holding the hands of these organisations as they grow. Madam Temporary Deputy Speaker, this is a straightforward matter. I am obviously very happy to see it come into fruition. It is a journey which started a long time ago. It is something that people have been expecting. I hope that the House will give this Bill maximum support, so that we can pass it and start the implementation process of the resultant law to give our people the protection they need for their deposits and, by implication, increase the confidence levels within our financial sector. With those words, I beg to second."
},
{
"id": 3664,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/3664/?format=api",
"text_counter": 509,
"type": "scene",
"speaker_name": "",
"speaker_title": "",
"speaker": null,
"content": "(Question proposed)"
},
{
"id": 3665,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/3665/?format=api",
"text_counter": 510,
"type": "speech",
"speaker_name": "Mr. Mututho",
"speaker_title": "",
"speaker": {
"id": 97,
"legal_name": "John Michael Njenga Mututho",
"slug": "john-mututho"
},
"content": "Madam Temporary Deputy Speaker, I rise to support the Bill."
},
{
"id": 3666,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/3666/?format=api",
"text_counter": 511,
"type": "speech",
"speaker_name": "Mr. Mututho",
"speaker_title": "",
"speaker": {
"id": 97,
"legal_name": "John Michael Njenga Mututho",
"slug": "john-mututho"
},
"content": "Supporting the Bill brings to mind some of those dark memories of the 1980s and as recently as the 1990s, when depositors lost huge chunks of their money in banks that went under. I must say that I was one such victim. In one of those banks which went under, I lost Kshs21 million, only to be told that I was entitled to be paid only Kshs100,000. It does not matter now. It happened. The way forward is the route we have taken, so that all deposits are properly protected through a viable insurance scheme."
},
{
"id": 3667,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/3667/?format=api",
"text_counter": 512,
"type": "speech",
"speaker_name": "Mr. Mututho",
"speaker_title": "",
"speaker": {
"id": 97,
"legal_name": "John Michael Njenga Mututho",
"slug": "john-mututho"
},
"content": "I would urge the Minister, at this juncture, to look at other possibilities too like covering our own Retirement Benefits Authority (RBA), the NHIF and the NSSF, so that instead of the Government spending hours and days negotiating with the World Bank and other international institutions or other countries, it can also borrow from our local institutions because the Government of Kenya will always be there. It may be the form of Government that we have today or other future governments; the truth is that the Government of Kenya will always be there. After incorporating this insurance scheme with deposits held by the RBA, the Government will not need to go overseas to borrow money. The Government will be able to implement development projects very fast for the good of the Kenyan people."
},
{
"id": 3668,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/3668/?format=api",
"text_counter": 513,
"type": "speech",
"speaker_name": "Mr. Mututho",
"speaker_title": "",
"speaker": {
"id": 97,
"legal_name": "John Michael Njenga Mututho",
"slug": "john-mututho"
},
"content": "Madam Temporary Deputy Speaker, caution would, however, be on the cost of this insurance. It is also good to do an economic evaluation to see whether when we insure the deposits, in the long run, it will be an open valve for the erosion of the value of the said funds. So, I would persuade the Minister to look into minimizing the risk in licensing such deposit collectors; he should also look at new ones, particularly the ones that are coming in now. The M-PESA facility and others are likely to hold huge amounts of money. Insuring those kinds of deposits becomes a challenge. The reason as to why I am saying this is that, if you look at the amount of money held by SACCOS, for instance, and look at the management of those SACCOS, you realise the exposure of the depositors."
},
{
"id": 3669,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/3669/?format=api",
"text_counter": 514,
"type": "speech",
"speaker_name": "Mr. Mututho",
"speaker_title": "",
"speaker": {
"id": 97,
"legal_name": "John Michael Njenga Mututho",
"slug": "john-mututho"
},
"content": "Madam Temporary Deputy Speaker, this Bill is long overdue. It should be supported. However, we need its fine-tuning, and we propose to undertake it during the Committee Stage, so that it does not become an impediment to good deposits management and discourage possible investors in our institutions."
},
{
"id": 3670,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/3670/?format=api",
"text_counter": 515,
"type": "speech",
"speaker_name": "Mr. Mututho",
"speaker_title": "",
"speaker": {
"id": 97,
"legal_name": "John Michael Njenga Mututho",
"slug": "john-mututho"
},
"content": "In conclusion, Madam Temporary Deputy Speaker, I want us to also look at the possibilities of empowering this new body to look and tie this insurance scheme with other very established insurances around the world that can be able to absorb huge losses in case and if it did happen. It can happen. Even the very best banks can land into the kind of problems that we saw the other day with one of the biggest and oldest newspapers in the world because of a very ridiculous kind of event where they were tapping people’s phones and then they had to wind up overnight. Assume a similar thing happens – not necessarily the same – that one of the major depositors or banks happens to have such a problem. Say, for instance, the new crimes coming through like crimes to do with drug trafficking and the rest of it, and that bank happens to be the principal shareholder. Such an avalanche of funds and the problems that come and follow that particular issue would need urgent attention because some of these deposits might be meant, say for instance, to tackle agricultural challenges, which need prompt time. Madam Temporary Deputy Speaker, I support this whole heartedly and look to the Third Reading and the Committee Stage, when some of these fine-tunings can be done and when the Minister will have a chance to interest more hon. Members to understand the importance and intricacies of the new proposed law."
}
]
}