What you need to know:
More than 200 Savings and Credit Co-operative Society (Saccos) that have deposits of Sh100 million and above have one week to comply with the new regulations that will bring them under the arms of the Sacco Societies Regulatory Authority (Sasra).
From July 1, 2021, all back office Saccos (Bosas) with deposits will now be regulated by Sasra.
They will be required to start reporting quarterly to the regulator and hire more staff among them chief executive officers, head of finance, ICT, and audit, which many Saccos fear would increase their costs of doing business.
They will also be required to maintain liquidity of 10 percent of their assets at all times to ensure that they have money to lend to their members whenever they knock on their doors.
Also targeted for increased regulations are more than 20 diaspora Saccos as well as an unknown number of digital Saccos.
Minimum capital threshold
“To be authorised, they need to ensure they comply with the minimum capital threshold which is 8 percent of their total assets,” Peter Njuguna, the acting Sasra chief executive officer said in an interview with the Nation. Before the change in the law, Sasra was only regulating deposit-taking Saccos or what are known as Front Office Saccos (Fosas). For Fosas, the minimum capital ratio is placed at 10 percent of their total assets.
“We are expecting between 200 to 250 institutions to come on board under the new regulatory framework. These are the ones with Sh100 million in deposit plus,” Njuguna said. The liquidity requirements he said will ensure that there is no queuing by members withdrawing from the Sacco or borrowing. He said the regulations will protect Saccos from collapse and that members' deposits are protected.
They will also be required to reclassify their loans and ensure that they provide for non-performing loans as well as put in place a system that is capable of monitoring transactions. He said for audit and ICT, Saccos can opt for outsourcing to lower their costs.
“There is an opportunity for the market for someone who can offer internal audit functions to a number of Saccos,” he said.
This is set to bring on board the non-deposit taking Saccos that had for decades operated below the radar with only licenses from the cooperatives department. Due to the containment measures, many Saccos did not hold their Annual General (AGM), and the new regulations are set to find their members off-guard.
At the end of last year, Sasra was regulating 175-deposit taking Saccos that held assets of Sh627 billion. When the new Sacco’s come on board, the agency is set to regulate assets of more than Sh1 trillion.
Editor's note: An earlier version of this story said that Sacco's have a week to comply with the new regulations. The correct position is that they have until June 30, 2021 to comply.