Savings and Credit Co-operative Society (Saccos) with more than Ksh 100 million in their possession have seven days to adhere to new rules. The set of regulations requires the Saccos to register with Sacco Societies Regulatory Authority (Sasra).
Starting June 2021, Sasra will regulate each back office Saccos (Bosas) with the said amounts.
Saccos will now report quarterly to the regulator and hire more employees. Some required staff includes ICT, head of finance, chief executive officers, which most of these institutions fear will increase the cost of business operations.
Additionally, they’ll have to maintain a 10 percent liquidity of their assets at all times. The move will ensure they have the capital to lend members whenever they come knocking at their doors.
Other institutions targeted in the move include an unknown number of digital Saccos and 20 Diaspora Saccos.
The minimum capital required
“The 200 Saccos need to ensure they comply with the minimum capital threshold, which encompasses 8 percent of their total assets,” said Sasra’s chief executive officer Peter Njuguna.
Before the new change, Sasra was known for regulating deposit-taking Saccos, commonly known as Front Office Saccos (Fosas). Fosas have a minimum capital ratio of 10 percent on all their assets.
Njuguna further stated there’s a possibility to have about 250 institutions coming on board. He also said the liquidity requirements would reduce the long queues from members when borrowing or withdrawing from the Sacco.
He noted the decision would protect Saccos from closing shop and help protect the deposit of members.
New loan system
Saccos will have a mandate to reclassify their loans by ensuring they support non-performing loans. They’ll also come up with a system that manages to monitor transactions. He added for ICT and audit, Saccos had an option of outsourcing at a lower cost.
“The market has an opportunity for a person capable of offering internal audit functions to various Saccos,” he stated.
This will bring on board Saccos, who had carried out operations with licenses from the cooperative department over the years.
Following the containment measures, most Saccos failed to carry out their Annual General Meeting (AGM).
By the end of 2020, Sasra was regulating 175 deposit taking Saccos holding money worth Ksh 627 billion.