KDIC Engages Bank CEOs on the Differential Premium System

KDIC Engages Bank CEOs on the Differential Premium System (DPS)

On 5^th March 2026, the Kenya Deposit Insurance Corporation (KDIC) held a Stakeholder Engagement Forum hosting Chief Executive Officers and management representatives of member institutions across the Kenyan banking sector.

The forum focused on the Differential Premium System (DPS), a risk-sensitive framework for calculating deposit insurance premiums. The session provided an important platform for discussion and collaborative refinement of the model, and attendant draft regulations. Importantly, this forms one of many public participation forums on the proposed KDI Regulations 2025 as required by law.

The Chief Executive Officer of KDIC, Mrs. Hellen Chepkwony, gave a keynote address to open the forum. In her address, Mrs. Chepkwony articulated the strategic significance of the DPS Model and called on all stakeholders to view deposit insurance as a shared institutional responsibility, for the protection of depositor interests and the banking system as a whole.

The model is an ideal framework that improves objectivity and consistency in the assessment process, provides clear risk categorisation, and applies a transparent risk-adjusted premium calculation formula.

The DPS Model was developed to incorporate international best practice in risk-based premiums assessment approaches. Following years of research and consultation, including an elaborate stakeholder consultation process, and extensive dialogue with bank CEOs, KDIC formally proposed the system in March 2021 and implemented it for the first time in July 2021. The 5th March 2026 forum is part of an ongoing cycle of engagements that also includes review sessions held between 2021 and 2025.

Technical discussions on the DPS framework were spearheaded by Julie Kinoti, the Deputy Director of Risk and Examination, and moderated by Paul Manga, Director of Deposit Insurance and Bank Surveillance.

The deposit insurance framework in Kenya has evolved significantly over the last decade. The shift from a flat-rate premium system to the risk-based model (DPS) reflects a global best practice that aligns each institution's contribution to the Deposit Insurance Fund (DIF) with its individual risk profile.

Representatives from the Central Bank of Kenya (CBK), the Kenya Bankers Association (KBA), and the Association of Microfinance Institutions (AMFI Kenya) participated in the discussions, with the bodies reaffirming their commitment to continued partnership and collaboration in key financial stability matters.