SACCOs and Regulations in Kenya

SACCO regulations

There are many savings and credit societies (SACCOs) operating without proper registration in Kenya.  And these face tough measures including closure through the regulations by the Savings Regulatory Authority (SASRA). SASRA has recently launched tough rules which are intended to weed out fraudulent SACCO outfits.

Read on Saccos and their formation

The new regulations set by SASRA will outlaw the use of the name Sacco for any outfit that is not registered by SASRA. The regulations come at a time when Kenyans are reeling from huge losses following the collapse of various SACCOs in recent times while holding member deposits.

The new regulation states: “A Sacco society authorized to undertake specified non-deposit taking business shall at all material times use the following words “Regulated Non-Deposit Taking SACCO” or “Regulated Non-DT-SACCO” as part of their name,” it says.

SASRA aims to protect Kenyans from fraudulent SACCOs

Sasra says that Savings and credit co-operative organizations (Saccos) that solicit money and fleece members will be deregistered.  Though the governance in cooperatives is quite good there are bad apples that Sasra is trying to clean up. This applies especially to the Saccos that are purporting to be Saccos but their principles are not pegged on cooperative principles. There are people who come and register and go out to solicit money from members without proper structures. Sasra is actually de-registering them and weeding them out. Some Saccos are structured and genuine and Kenyans need to know what Saccos they are getting registered to. Kenyans need to understand Sacco models that will be of help; do due diligence. What is hurting Kenyans is they just hear of Saccos advertised in the media and they join but later they cry foul when things go bad.


The cooperative movement is based on principles and values like self-help. Members must own the business model, be principled, responsible, democratic, exercise equality, be ethical, and have solidarity. The SACCOs fraternity needs to have a business model members can own. A sustainable movement is where members own a business model and that is what stable Saccos are playing. This will create sustainability in the financial space.

Non-Deposit taking Saccos

A non-DT SACCO is described as a society that mobilizes membership subscriptions. It also shares capital through digital or other electronic payment platforms or where total non-withdrawable deposits from members are equal to or exceeds the sum of one Sh100 million. The regulations bar Saccos from dealing in cryptocurrency, foreign trade, trust, custodial, deposit-taking, venture capital investments, underwriting or placement of securities, or lending money to non-members. Purchase of land will only be done to expand the Sacco business within limits prescribed by Sasra.

The passing of the new regulations will be sped up because people using the Sacco brand to enrich themselves by fleecing Kenyans of their hard-earned money will be dealt with. These Ponzi schemes must not only be stopped but punished as a deterrent to people tarnishing the Sacco brand. It is such people that discourage savers. Let everyone register and subject their SACCOs to scrutiny is the stand of SASRA.

It will be mandatory for every SACCOs to report regularly on their financial status. This is in addition to keeping an up-to-date register providing details of each member, their contacts, shares as well as savings.

This could deter past happenings where Saccos and other entities hid member registers, making it impossible to establish their true financial position.

The need for regulation and supervision

Some people have never liked being under the regulation, but it is good to allow supervision that enhances the integrity of SACCOs’ work. The unregulated ‘ SACCOs’ are now defined as non-deposit-taking businesses that hold non-withdrawable deposits from members equal to or exceeding the sum of Sh100 million. Any entity receiving a membership subscription as well as raising share capital through digital or other electronic payment platforms within or in the Diaspora also falls under Sasra.

No SACCO is to invest in land or buildings without consent from Sasra. Also, no Sacco official is to use Sacco funds in pursuit of personal interests. Failure to seek registration could see Sasra halt an entity’s operations with a public advertisement placed in the dailies informing Kenyans of the stoppage.

Sasra will notify members of the public and employers to immediately cease making any further remittances of non-withdrawable deposits to the Sacco society. No Sacco is to open an office or branch and close the same without Sasra’s consent.

Read on Factors to Consider when joining a SACCO

Top Managers to be vetted

Top managers of savings and credit co-operative societies (SACCOs) will undergo fresh vetting by the regulator. The law contains a raft of new revamped rules likely to tighten the noose on rogue Sacco managers. In the draft rules, Sacco managers will undergo fresh vetting by the regulators. This is with the aim to ensure compliance with prudential and ethical standards. The “fit and proper test” will be carried out by a task force. This includes members of the board of directors, supervisory committee, chief executive officer, and senior management staff including heads of information communication and technology, the internal audit, credit management, and finance functions. The proposed rules are part of a government plan to rewrite outdated policies. This also comes in handy to guide the conduct of non-deposit-taking savings and credit cooperative societies.

SACCOs must Report every quarter

Additionally, the SACCOs will be required to start reporting every quarter’s financial performance to the regulator. This is in a bid to beef up transparency. Unlike deposit-taking SACCOs, which make regulatory returns on monthly cycles, the specified non-deposit-taking SACCOs will be reporting every quarter. This means that the regulatory returns are submitted end of each quarter.


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