Nearly a third of bank accounts have been closed for being inactive, freezing billions of shillings in the wake of data clean-up.
Banks shut down 33.8 million accounts in the year to June 2025, representing 30 percent of the 112.5 million deposit accounts the industry held before the crackdown.
Data from the Kenya Deposit Insurance Corporation (KDIC) shows that the number of accounts fell from 112.5 million in June 2024 to 78.7 million in June 2025, following what lenders described as a “data clean-up exercise.”
“The account clean-up was attributed to the rationalisation of dormant or inactive accounts,” said KDIC in its latest annual report.
The amount held in dormant accounts could run into billions of shillings.
For instance, a Sh1,000 balance in each of the dropped accounts would easily add up to Sh33.8 billion, pointing to the volume of idle savings locked away in dormant accounts.
Dormant funds
Banks typically designate bank accounts as inactive after 6–12 months of no customer-initiated transactions, irrespective of deposits flowing, and become dormant after one year or more of inactivity.
Lenders then impose restrictions on dormant accounts, including stopping interest earnings, limiting withdrawals, and charging maintenance fees.
Dormancy acts as a safeguard against identity theft and unauthorised access to the idle funds.
Under banking regulations, funds in dormant accounts remain payable to customers upon reactivation.
Many banks levy reactivation charges. KCB Bank Kenya tariff shows it charges Sh200 reactivation fees for accounts that have been dormant for up to two years and Sh500 for those above two years. Equity Bank Kenya has a flat rate of Sh200 while Co-operative Bank of Kenya reactivates for free.
Reactivation usually requires the customer visiting a branch with crucial documents such as a national identification card and a Kenya Revenue Authority (KRA) personal identification number (PIN).
KDIC said in an emailed response that it does not segregate deposits as either active or dormant since it protects all deposits in customer bank accounts in the banking system in line with the coverage limit, irrespective of the account status.
“The corporation does not segregate value of deposits based on active vs dormant since all accounts [dormant and active] are eligible for protection irrespective of the account status,” said KDIC.
State transfer
The clean-up highlights the vast pool of idle savings now at risk of being transferred to the government for safekeeping until owners come forward to lodge formal claims.
If an account remains dormant for more than five years, the funds are transferred to the Unclaimed Financial Assets Authority (UFAA) for safekeeping until claimed by the owner.
The clean-up also reshapes the narrative around financial inclusion, which has always put banks at the forefront.
FinAccess Household Survey by FSD-Kenya showed Kenya’s financial inclusion stood at 84.9 percent in 2024 compared with 26.8 percent in 2006. The drop in bank account numbers suggests that a portion of previously counted accounts were not actively used.
The KDIC data marks the first public disclosure of account dormancy rates in the banking sector. Previous insights came from a 2016 joint survey involving the Central Bank of Kenya (CBK) and Financial Sector Deepening Kenya, which showed that 22.3 percent of bank accounts were dormant at the time.
Account growth
Banks have been at the forefront in promoting financial inclusion through physical branches backed by digital and internet banking, which has seen many customers hold multiple accounts.
CBK data shows the number of deposit accounts has been growing over the years, crossing the 100 million mark in 2024 compared with 28.43 million a decade earlier and 8.48 million in 2009.
KDIC said all the accounts affected by the purge held deposits of below Sh500,000, which is the maximum the agency insures and compensates customers in case their bank collapses.
“Notably, accounts with balances below Sh500,000 decreased by the same number from 111.8 million to 77.9 million, indicating that all the accounts that were dropped fell under this category,” said KDIC.
The mass closure, however, did not stop the trend of growth in deposits, showing that the amount held in banks is concentrated in the hands of a few top individuals and businesses.
KDIC data shows deposits rose to Sh5.8 trillion in the year ended June 2025 from Sh5.6 trillion a year earlier despite the reduction in account numbers.
The review period saw insured deposits decline by Sh37.9 billion to Sh844 billion in June 2025 from Sh881.9 billion in the previous year.
Coverage gap
The divergence between rising total deposits and falling insured deposits suggests that growth in deposits is increasingly concentrated in larger accounts, which typically exceed the Sh500,000 insurance limit per depositor per bank.
KDIC said the proportion of accounts fully covered remained unchanged at 99.01 percent during the review period. However, the value of deposits protected declined to 14.38 percent in June last year from 15.69 percent in a similar period in 2024.
The 14.38 percent is below the International Association of Deposit Insurance recommended minimum of 20 percent.
The agency last month issued a draft legal notice in which it is seeking to double the maximum compensation to Sh1 million, a move that may improve the ratio of insured deposits to total eligible deposits.
