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"id": 3682,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/3682/?format=api",
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"type": "speech",
"speaker_name": "Mr. M’Mithiaru",
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"speaker": {
"id": 72,
"legal_name": "Ntoitha M'mithiaru",
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"content": "Thank you, Madam Temporary Deputy Speaker. I also stand up to support the Kenya Deposit Insurance Bill. As I speak, I am one person also who has great experience in the finance industry. Therefore, I know the importance of having such a Bill. It can only just be reflected that such a deposit insurance fund will assist our banking system in ensuring stability and enhancing the confidence that the depositors have in their banking institutions and other financial institutions. It may be recalled that before the current Deposit Protection Fund which currently is a department of the Central Bank of Kenya was established, if there was any management or receivership in a bank, it was domiciled at the office of the Attorney- General. That took a very long time. Sometimes the people handling it did not really know the intricacies of handling financial institutions. With the emergence of the Deposit Protection Fund at the Central Bank of Kenya, I think things have changed. We know as of now, any person depositing money in a bank or financial institution and, for some reason it goes under, that person can get a maximum of Kshs100,000. That maximum was fixed in 1989 or 1987. I remember that time I used to be in the banking industry. It was that long time ago. Up to now, there has been no revision at all. I also do hope that now with the new Bill, it will actually give more incentives to depositors. If there is any refund for banks or financial institutions that may have gone under, then, at least, there must be some kind of a percentage of the deposit that one has in the banking institution rather than the fixed amount that we are seeing today whereby if I have Kshs20 million in my account and the bank goes under, I will get Kshs100,000. If somebody else had Kshs100,000 in their account, that person will get 100 per cent. So, I am sure within this law, the Minister can be empowered through the regulations to ensure that there are some revisions of such amount from time to time, taking into account also the level of our economy. Madam Temporary Deputy Speaker, the good thing about this one also is that this Bill proposes that the Kenya Deposit Insurance Corporation will be autonomous. It will now no longer be a department of the Central Bank of Kenya. It will be a body corporate on its own and it will also now manage that insurance fund. That way, it will also relieve the CBK so that the CBK will concentrate on its core mandate of the monetary policy of the land and also the general supervision of the banking industry. Madam Temporary Deputy Speaker, as I support this Bill, there are also issues I would like to raise within our banking system. You will find that in our banking system they compete more on who will post huge amounts of profits at the end of the financial year, rather than competing for quality service. That is why you find that even today the banks are posting huge profits, but when you go just for a very small service you are charged a lot of money. For example, even to get a mere statement just printed over the counter some banks will charge as much as Kshs200. Yet, at the end of the year, they are posting huge amounts of money. So, we would also wish that our banking institutions should be partners in development to ensure that they do not really unnecessarily exploit their customers when it comes to offering services. Currently, the CBK has raised the CBK lending rate to 16.5 per cent. The banks have also adjusted their base rates accordingly to 20 plus. The lending rates n some banks have now hit 30 per cent. If you follow those banks, you find that in their third quota profits they are again to post huge profits and yet, they are still exploiting the customers. I would also urge the banks to ensure that they really become partners in development, so that they do not exploit the same customers that they serve. If banks charge very high interest rates, then you find that most of the customers may not afford and then the default rate will increase. Now as it were, the bank which had the intention to get huge profits may even end up getting losses. When banks get losses year in, year out, then now it becomes a candidate of the deposit insurance fund. So, we hope that the banks will be reasonable enough to ensure that they treat their customers well by charging something reasonable, but not the high rates that we are seeing today. With those remarks, I support."
}