The Central Bank of Kenya (CBK) has ordered the closure of Dubai Bank for defying regulations and failing to pay debtors.

The move comes following a recommendation from Kenya Deposit Insurance (KDIC), who was appointed as receiver by CBK in the interest of the bank’s depositors, creditors and public.

"The KDIC report indicates that considering the magnitude of weaknesses of Dubai Bank Kenya Limited, liquidation is the only feasible option," CBK said in a statement.

The central bank has now also appointed KDIC as the liquidator of Dubai Bank Kenya.

KDIC acting CEO Aggrey Bett recently in a statement said: "At this point, all insured deposits shall be paid by KDIC up to a maximum of Sh100,000 per depositor.

"Any balances above this amount shall equitably be paid as and when the liquidator accumulates enough funds from sale of assets of the collapsed Bank and recoveries from outstanding loans and debts."

The lender was put under receivership earlier this month following liquidity problems and for violation of banking rules which included falling below the required minimum capital mark.

The central bank said that it had engaged the lender on various occasions to resolve the issues but the bank’s cash reserve ratios did not show any improvement.