East Africa’s deposit insurers have started sharing information on best practices as a first step towards merging the rules and regulations governing the protection of depositors’ cash in the region.
The EastAfrican has learnt that harmonisation of deposit insurance schemes is under consideration by EAC partner states, as the number of banks with cross-border operations has increased.
In the past two weeks, the Kenya Deposit Insurance Corporation has hosted delegations from Rwanda and Uganda to enhance cross-border co-operation on the protection of bank depositors’ interests.
This comes after the member states’ monetary affairs committees resolved last year in Kigali to adopt measures to deal with troubled banks, such as increased surveillance of the cash position of banks.
The member states also agreed that each develop a resolution on funding and institute prompt corrective action frameworks for banks within the region.
Plans for the integration of East Africa’s financial sector are being fine-tuned by the Committee, which is composed of governors of the central banks and technical officials of EAC partner states, save for South Sudan.
Kenya has nine banks with regional subsidiaries, with Uganda hosting the largest number (99) of Kenyan banking subsidiaries followed by Tanzania (77), Rwanda (55), South Sudan (26) and Burundi (9), according to the latest data from the Central Bank of Kenya.
East African banking regulators are working to improve the operations of their deposit protection insurance schemes to boost confidence in the banking industry.
In Kenya, depositor confidence was shaken after the collapse of Dubai Bank, Imperial Bank and Chase Bank in quick succession.
In Uganda, a team of consultants from the World Bank are helping to reorganise its deposit protect fund by separating its operations from that of the Bank of Uganda.
In Rwanda, the National Bank of Rwanda is working to strengthen its Deposit Guarantee Fund, which gives protection to eligible deposits of up to Rwf 500,000 ($581.46) per depositor per member finance institution.
In Tanzania, the Deposit Insurance Board increased the amount of protected deposits from Tsh500,000 ($222) to Tsh1,500,000 ($666).