The Kenya Deposit Insurance Act was enacted in 2012 to provide a comprehensive legal framework for the establishment and operations of a deposit insurance system in Kenya. The primary objectives of this Act are: 1. To protect bank depositors by providing insurance coverage for their deposits up to a specified limit in the event of a bank failure or insolvency. 2. To promote stability and public confidence in Kenya's banking sector by minimizing the disruptive effects caused by bank failures. 3. To regulate deposit-taking institutions, including commercial banks, microfinance banks, and mortgage finance companies, concerning deposit insurance matters. The Act mandates the formation of the Kenya Deposit Insurance Corporation (KDIC), a statutory body responsible for administering the deposit insurance system. The KDIC is tasked with managing the Deposit Insurance Fund, which is funded through annual premiums paid by member institutions based on their insured deposit liabilities. Under the Act, all deposit-taking institutions licensed by the Central Bank of Kenya are required to participate in the deposit insurance system and contribute to the Deposit Insurance Fund. The Act specifies the categories of deposits eligible for insurance coverage, including savings accounts, current accounts, and fixed deposits held by individuals, businesses, and other entities. The Act also outlines the powers and responsibilities of the KDIC, including conducting risk-based assessments of member institutions, intervening in troubled banks, and facilitating the resolution of failed banks through methods such as mergers, acquisitions, or liquidation. Furthermore, the Act establishes a comprehensive regulatory framework governing the operations of deposit-taking institutions concerning deposit insurance. It sets forth requirements for record-keeping, reporting, and cooperation with the KDIC, as well as penalties for non-compliance. The Kenya Deposit Insurance Act 2012 plays a crucial role in enhancing public confidence in the banking system, protecting depositors' funds, and promoting financial stability in Kenya.