Mr Jude Njomo, the architect of interest cap law. FILE PHOTO | NMG
Banks will be compelled to keep updated information on next of
kin of account holders if MPs approve proposed amendments to the Banking
Act.
Kiambu MP Jude Njomo, the architect of the
interest rate capping law, wants banks to maintain a register containing
particulars of the next of kin of all customers operating savings,
current and fixed deposit accounts.
The next of kin
rule will ensure easy access to cash upon death of an account holder and
conclusion of administration and succession processes in court.
About
Sh5.7 billion had by June last year been transferred from bank accounts
to the Unclaimed Financial Assets Authority (UFAA) because their owners
could not be traced.
Mr Njomo has sponsored
amendments to the Finance Bill, 2018 seeking to change Section 44B of
the Banking Act to introduce a requirement that banks keep updated
information on next of kin of account holders.
“Every
bank or financial institution licensed under this Act shall, in respect
of each savings current or fixed deposit account operated at the
institution, maintain a register containing particulars of the next of
kin of all customers operating such accounts and shall update this
register on an annual basis,” the new section 44B (1) reads in part.
“A
bank or financial institution that contravenes subsection (1) commits
an offence and shall be liable for each account in which there is
default to a fine not exceeding Sh1 million, in every year, or part of
the year during which the default persists,” the proposed amendment
states.
Unclaimed assets from bank accounts accounted
for 67 per cent of the Sh8.5bn held by UFAA from items like pension,
sacco savings and insurance policies.
“The amendment
creates an offence for a bank which fails to keep particulars of next of
kin so that families are able to access funds even upon the death of a
bread winner,” he said.
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