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{
    "id": 1096135,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1096135/?format=api",
    "text_counter": 294,
    "type": "speech",
    "speaker_name": "Funyula, ODM",
    "speaker_title": "Hon. (Dr.) Wilberforce Oundo",
    "speaker": {
        "id": 13331,
        "legal_name": "Wilberforce Ojiambo Oundo",
        "slug": "wilberforce-ojiambo-oundo-2"
    },
    "content": "talking sales people to invest or deposit in shell companies. In many occasions, many of the institutions that have collapsed have collapsed by design. It is not by default. There was already an intention from the word go to defraud specifically the big depositors who are generally government institutions, government entities and other related entities. To imagine that an institution will fail in this modern era with a strong CBK is, therefore, to cast doubt into the ability of the Central Bank and other institutions not to have seen the signs in advance. Section 38 of the principal Act clearly mandates the corporation together with the CBK to continuously carry out inspection to ensure there are no risks at all. The same Act under Section 2 creates a definition called “problem institutions” which means any institution that places the interest of its depositors or the banking sector at risk. Essentially, the amendments in this Act, however well-intentioned they are, are trying to address the wrong problem. They are not trying to address the root cause of any collapse. Today, Ksh100,000 might not mean much. Neither will Ksh1 million mean much. In the next few years, we might even move these limits to even Ksh1 billion. We will never be able to satisfy all the depositors. The focus should not actually be the minimum, the focus should not be any monetary amount, it should be how we insulate the banking sector from collapse that is very well designed. This country has a tendency of being carried away by euphoria, sloganeering and very sweet marketing tools, and pitch that sways Kenyans to deposit or engage in some risky investment. How do you explain pyramid schemes and phony SACCOs that swindle people’s money yet they know very well they are being swindled? We must go beyond prescribing such restrictive measures and address the root cause. How do you determine what a bank is? Banks create facilities, deposits and assets that can insulate them from collapse. If a small bank tells you that they will pay you 15 per cent on your deposit, any sane person should ask himself or herself whether that is real or a mere story. The problem with Kenyans is that they have a get-rich-quick mentality that is being sold by some politicians in the name of the bottom-up economy. Manna no longer falls from heaven. There is no other way other than working. Those get-rich-quick schemes that lead you to deposit and make money will not happen. I totally empathise with my colleague for having gone out of his way, but honestly speaking, this is another legislation that has no value. Basic statistics indicate that 90 per cent of deposits in many institutions, especially under individual deposits, are between Ksh100,000 to Ksh200,000. That is an average of about Ksh150,000. Moving the deposit to Ksh1 million without looking at the amount of funds and levies those financial institutions contribute to the Deposit Protection Fund will lead to its collapse. It will never manage to pay because the principle of insurance is that there must be enough premiums and less claims for it to be suitable. I am inclined to agree with the Committee that this amendment Bill might not be the right solution to the underlying problems in the banking sector and the stories going around. Somebody with Ksh1 million in the bank cannot really be called a hustler unless that is another swindler that we know of. Thank you, Hon. Temporary Deputy Speaker."
}