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{
    "id": 660905,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/660905/?format=api",
    "text_counter": 146,
    "type": "other",
    "speaker_name": "",
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    "speaker": null,
    "content": "(a) If the institution fails to meet any financial obligations. For example, if the depositor is not able to withdraw money because the bank is unable to meet the demand, that is one of the circumstances. Therefore, if the institution fails to meet any financial obligations, when it falls due. (b) If a petition is filed or resolution is proposed for the winding up of the institution. (c) If the auditor of an institution makes a report to the CBK, under the provisions of subsection 4 of the Act. (d) If the CBK discovers or becomes aware of any fact or circumstances, which in the opinion of the Bank, warrants the exercise of relevant power. This was applied in one of the three banks. (e) If the institution is significantly under-capitalized. Again, one of the institutions actually had that challenge. (f) If the institution fails to submit a capital restoration plan or plan to solve all of the deficiencies mentioned in Section 33. Mr. Speaker, Sir, Section 43 (2) of the Deposit Insurance Act sets out the circumstances under which the CBK can appoint the Kenya Deposit Insurance Corporation as a receiver of the bank. It says that the CBK shall appoint the corporation as the sole receiver of any institution if it determines that:- (a) the institution’s assets are less than the institution’s obligations, in other words, the assets are far less than the liabilities of the bank; (b) an unsafe or unsound condition to transact business exists or other cause that warrants the exercise of relevant power in the interest of the institution; (c) there is a willful violation of a regulatory or supervisory order; and, (d) there is a concealment of the institution’s books, papers, records or assets; (e) the institution is likely to fail to meet any of the financial obligations or depositors’ demands. There are more circumstances given in the answer. Regarding the regulatory and legal procedures followed, the CBK may, through onsite inspection of a bank, offsite surveillance or auditor’s report:- (a) Establish that the bank has violated the law or is facing certain deficiencies such as capital inadequacy or liquidity deficiency. (b) Notify the concerned bank on the violations or deficiency. (c) Engage the concerned bank with a view to addressing the violations or deficiencies in question; (d) Give an opportunity to the affected bank to address the deficiencies or violations, that is, consideration whether the case of the bank in question falls under Section 34 of the Banking Act or Section 43 of the Kenya Deposit Insurance Act. In other words, whether the adverse circumstances of the bank fall within the grounds under which a bank can be placed under receivership and whether placement under receivership is the best option in the circumstances. (e) The Kenya Deposit Insurance Corporation (KDIC) is notified of the adverse circumstances surrounding the bank in question. The electronic version of the Senate Hansard Report is for information purposes only. A certified version of this Report can be obtained from the Hansard Editor, Senate"
}