Govt Goes After Loan Defaulters to Recover Ksh 45B


  • The government through the Kenya Deposit Insurance Corporation (KDIC) is looking for debtors in 27 collapsed banks as it moves to raise Ksh45.5 Billion.

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    Individuals and businesses who have not accessed their mortgage services in failed banks such as Chase, Dubai and Imperial risk having their assets at auction in the recovery process.

    The agency is looking for a management company for that and will use the legal payment documents held by the bank as collateral for the remaining loans.

    “KDIC wants to appoint a suitable company to oversee the management of the activities of some troubled bank borrowers to obtain borrowed money from banks,” KDIC said.

    KDIC CEO Mohamud Mohamud during a recent press conference


    It found that many businesses stopped repaying their loans after struggling financial institutions were placed under receipt.

    As of June 2018, KDIC has received Ksh10.2 billion and Ksh45.5 Billion has not yet been paid.

    The agency found that pending loans were preventing depositors from collapsed banks from recovering their savings.

    The current law gives them priority when compensating from the money earned from a collapsed bank up to a limit of Ksh500,000 per account.

    In April 2016, the Central Bank of Kenya (CBK) appointed the Kenya Deposit Insurance Corporation (KDIC) as the recipient of Chase Bank Limited in accordance with the provisions of Section 43 (1), 43 (2) and 53 (1) of Kenya Deposit Insurance Act, 2012.

    Two years later in April 2021, KDIC submitted the Recipient Report to CBK recommending that CBLIR be abolished. The report shows that given the weak financial position of the bank, bankruptcy was the only possible option.

    CBK reviewed the KDIC proposal and considered that liquidation would facilitate the effective settlement of residual assets and liabilities in accordance with Kenyan law, protect the interests of CBLIR depositors, its creditors, and the wider public interest.

    The Chase Bank resolution left Imperial Bank Limited as the sole lender in receipt.

    File image of Kenyan bank notesFile image of Kenyan bank notes

    File image of Kenyan bank notes




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