Microfinance (Deposit Taking Microfinance Deposit Protection Fund) Regulations, 2009 (Cap. 493D)

MICROFINANCE (DEPOSIT TAKING MICROFINANCE DEPOSIT PROTECTION FUND) REGULATIONS, 2009 ARRANGEMENT OF REGULATIONS 1. Citation. 2. Interpretation. 3. Contribution to the Fund. 4. Submission of monthly returns. 5. Waiver of contribution. 6. Revocation of protection. 7. Protected deposit. 8. Right to consolidate accounts. 9. Payments out of the Fund. 10. Limitation of claims. 11. Liability of insolvent institutions. 12. Liquidator’s duty to the Board. 13. Notice of appointment and security. 14. Meeting of Creditors. 15. Power to waive proof of debt. 16. Power of the Board to decide all claims. 17. Pending of proceedings. 18. Winding up. SCHEDULES FIRST SCHEDULE – DEPOSIT PROTECTION FUND BOARD SECOND SCHEDULE – DEPOSIT PROTECTION FUND BOARD THIRD SCHEDULE – CERTIFICATE OF DEPOSIT PROTECTION MICROFINANCE (DEPOSIT TAKING MICROFINANCE DEPOSIT PROTECTION FUND) REGULATIONS, 2009 [L.N. 5/2009.] 1. Citation These Regulations may be cited as the Microfinance (Deposit Taking Microfinance Deposit Protection Fund) Regulations, 2009. 2. Interpretation In these Regulations, unless the context otherwise requires— “Board” means the Deposit Protection Fund Board established under section 36 of the Banking Act (Cap. http://41.84.156.1:8181/exist/kenyalex/actviewbyid.xql?id=KE/LEG/EN/AR/B/CHAPTER%20488/sec 36#KE/LEG/EN/AR/B/CHAPTER 488/sec 36 http://41.84.156.1:8181/exist/kenyalex/actviewbyid.xql?id=KE/LEG/EN/AR/B/CHAPTER%20488#KE/LEG/EN/AR/B/CHAPTER 488 488); “contributory institution” means an institution licensed that has received a notice to contribute under regulation 3(2); “protected deposit” means the total liability of the institution to the depositor limited to a maximum of one hundred thousand shillings. 3. Contribution to the Fund (1) The Central Bank shall upon licensing an institution under the Act, notify the Board. (2) The Board shall, after it has been notified by the Central Bank under paragraph (1), send a notice to contribute, specifying the premium payable by an institution and stating the period within which the premium shall be payable by the licensed institution. (3) An institution shall, upon the commencement of its operations and receiving a notice to contribute under regulation 3(2), be a contributory institution to the Fund. (4) The Board shall calculate the premium payable based on an institution’s average deposit liabilities over a period of twelve months or such other shorter period preceding the levying of contributions. (5) The contribution payable by a contributory institution shall be 0.15% of the average annual deposits or three hundred thousand shillings, whichever is higher: Provided that the minimum premium payable shall be three hundred thousand shillings. (6) The Board shall upon receiving a contribution from a contributory institution issue a certificate of deposit protection in Form C set out in the Third Schedule to the contributory institution. 4. Submission of monthly returns Every institution licensed under the Act shall, on a monthly basis, prepare and submit to the Board— (a) certified statements of deposits for each month in Form A set out in the First Schedule; (b) deposit analysis by range, type and number of accounts in the prescribed format in the Second Schedule; and (c) any other returns as the Board may require from time to time. 5. Waiver of contribution Where it appears to the Board that a licensed institution is carrying on substantially the same business as that previously carried on by one or more institutions that are, or were contributory institutions, it may waive contribution for the licensed institution: Provided that nothing in these Regulations shall entitle any institution to a repayment of the contributions previously made to the Fund. 6. Revocation of protection The Board may revoke a contributory institution’s deposit protection cover where the contributory institution— (a) has failed to pay the assessed premium; or (b) conducts it’s affairs in a manner detrimental to its interests or the interest of its depositors. 7. Protected deposit (1) The Minister may, on the recommendation of the Board, increase the maximum protected deposit amount specified under these Regulations by an Order in the Gazette. (2) The Board shall, when determining the liability of a contributory institution to a depositor, not take in to account any liability in respect of a deposit if it is no longer protected or if it is made after the termination of protection of deposits of that institution. (3) The Board shall, before terminating the protection of the deposits of an institution, publish a notice in the Gazette and in one newspaper of a nationwide circulation, stating its intention to terminate protection of deposits in an institution. (4) Unless the Board otherwise directs, there shall be deducted the amount of any liability of a depositor to the contributory institution in respect of which a right of set-off existed immediately before the institution became insolvent, against any such deposit or in respect of which such a right would then have existed if the deposit in question had been payable on demand and the liability in question had fallen due. 8. Right to consolidate accounts The Board shall, when determining the amount payable to a depositor, consolidate all the depositor’s related accounts in a contributory institution for the purposes of payment. 9. Payments out of the Fund (1) When a contributory institution whose deposits are protected becomes insolvent, the Board shall, as soon as is practicable pay out of the Fund by cash, cheque or bank transfer to a depositor, who has a protected deposit with the contributory institution, an amount equal to his protected deposit. (2) The Board shall not consider any liability unless proof of the debt that gives rise to the liability has been given to the Board in such manner, as the Board shall determine. (3) Where the records of a contributory institution are incorrect, misleading or uncertain, the Board may pay a percentage of the protected deposit that it considers appropriate in the circumstances. 10. Limitation of claims Notwithstanding the provisions in any other written law a claim for payment of— (a) a protected deposit by a creditor of an institution shall not be brought after the expiry of two years from the date of publication of commencement of such payment by the Board; or (b) a dividend by a creditor of an institution shall not be brought after the expiry of one year from the date of publication of commencement of such payment by the Board: Provided that this Regulation shall not apply to a person who has, for reasons beyond his control and to the satisfaction of the Board, been unable to make his claim. 11. Liability of insolvent institutions (1) Where a contributory institution is insolvent and the Board had made or is under an obligation to make an insolvency payment to a depositor, the institution shall become liable to the Board, for a contractual debt incurred immediately before the institution become insolvent for an amount equal to the Board’s liability to depositors. (2) An insolvent institution shall not make any payment to a depositor unless it has fully repaid the Board all the moneys that the Board had paid the depositor. (3) An insolvent contributory institution shall reduce its liability to a depositor by an amount equal to the insolvency payment made or is to be made by the Board to the depositor. 12. Liquidator’s duty to the Board (1) The liquidator of an insolvent contributory institution shall pay to the Board the amount paid to a depositor as protected deposit under regulation 9, and thereafter pay to the depositor any excess amount. (2) The Board may, by notice in writing served on a contributory institution or the liquidator of an insolvent contributory institution to furnish the Board with information and such books, papers or records as the Board may require to carry out its functions under the Act at the place specified in the notice. (3) Where any books, papers or records have come into the possession of the official receiver or the liquidator as a result of the insolvency of a contributory institution, the official receiver or the liquidator shall permit any person duly authorized by the Board in writing to inspect such books, papers or records. 13. Notice of appointment and security (1) Where the Board is appointed as a liquidator of an insolvent contributory institution, it shall, as soon as practicable, cause a notice of its appointment to be published in the Gazette and at least one daily newspaper of nation wide circulation. (2) The Board shall not be required to give any security in respect of any matter in which it is a party due to its appointment as a liquidator. 14. Meeting of Creditors Where the Board has been appointed as a liquidator of an institution, it shall not, unless the court otherwise directs, convene a meeting of the creditors and contributors under the provisions of section 236 of the Companies Act (Cap. 486). 15. Power to waive proof of debt Where the Board has been appointed as a liquidator of an insolvent contributory institution, it may, if it deems fit, admit the claim of any depositor or class of depositors without submission of formal proof of debt and shall notify the depositor or depositors concerned accordingly. 16. Power of the Board to decide all claims (1) The Board shall have discretion to receive and decide whether to admit or reject any claim made by or against an insolvent contributory institution, otherwise determination the issue of priorities or any other matter which may relate to or arise in the course of winding-up of an insolvent contributory institution. (2) A party who is dissatisfied with the decision of the Board may apply for review to the High Court under the Companies Act (Cap. 486). 17. Pending of proceedings (1) Where an institution being wound up, no suit or any other legal proceedings, in respect of which the High Court has jurisdiction under the Act that is pending in any court immediately before the commencement of the Act or the commencement of the winding-up of the institution, whichever is later, shall proceed except in the manner provided under the Act. (2) Nothing in this paragraph shall apply to any proceeding pending on appeal before the High Court or the Court of Appeal. 18. Winding up Where the Board is appointed as the liquidator of on insolvent institution under section 38(1) of the Act, the Board shall wind up the institution in accordance with the provisions of the Companies Act (Cap. 486). FIRST SCHEDULE [Regulation 4(a).] DEPOSIT PROTECTION FUND BOARD http://41.84.156.1:8181/exist/kenyalex/actviewbyid.xql?id=KE/LEG/AR/C/CHAPTER%20486/sec 236#KE/LEG/AR/C/CHAPTER 486/sec 236 http://41.84.156.1:8181/exist/kenyalex/actviewbyid.xql?id=KE/LEG/AR/C/CHAPTER%20486#KE/LEG/AR/C/CHAPTER 486 http://41.84.156.1:8181/exist/kenyalex/actviewbyid.xql?id=KE/LEG/AR/C/CHAPTER%20486#KE/LEG/AR/C/CHAPTER 486 http://41.84.156.1:8181/exist/kenyalex/actviewbyid.xql?id=KE/LEG/AR/C/CHAPTER%20486/sec 38#KE/LEG/AR/C/CHAPTER 486/sec 38 http://41.84.156.1:8181/exist/kenyalex/actviewbyid.xql?id=KE/LEG/AR/C/CHAPTER%20486#KE/LEG/AR/C/CHAPTER 486 SECOND SCHEDULE [Regulation 4(b).] DEPOSIT PROTECTION FUND BOARD THIRD SCHEDULE [Regulation 3(6).]