Telepost, Moi University among 12 saccos on the regulator’s watchlist

A dozen deposit-taking savings and credit co-operative societies including giants such as Moi University Sacco and Telepost Sacco have been issued with temporary six-month licences pending further review of their financial health.

The Sacco Societies Regulatory Authority (Sasra) granted the 12 credit unions provisional permits to continue taking deposits and offering banking services until June 30, even as the regulator probes their compliance to capital and corporate governance requirements.

Sasra acting chief executive John Mwaka said the affected saccos had capital and liquidity challenges, but have been given more time to comply with regulatory ratios.

“They have up to June to comply,” Mr Mwaka said in an interview.

Sasra regulations require deposit-taking credit unions to maintain a minimum 15 per cent liquidity ratio, and are compelled to file a report at the end of every month detailing the liquid assets as well as the balance of liquid liabilities.

Saccos are also required to maintain a core capital of not less than Sh10 million, maintain a core capital to total assets ratio of 10 per cent, and core capital to deposit as well as institutional capital to total assets at eight per cent each.

Moi University Sacco, which has more than 3,000 members and a loan book of Sh610.4 million said it is finalising sale of a building in Eldoret town expected to raise between Sh800 and Sh900 million.

“The sale is on and we expect to complete by early March. This will sort out everything and bring us back to the road,” David Kiptoo, chief executive of Moi University Sacco, told Business Daily.

Banana Hill Sacco had its deposit-taking licence revoked while Jijenge Sacco, formerly Macadamia Sacco, will continue to run under statutory management of the regulator.

The regulator said Banana Hill Sacco’s licence was cancelled after failing to submit full-year financial results for 2015, in breach of reporting rules which require credit unions to file their audited results by March every year.

Kiambu-based Jijenge Sacco was placed under statutory management on October 2, 2014 due to liquidity challenges, high external borrowing, and inability to meet obligations to depositors and other third parties.

Sasra, through a gazette notice dated January 27, 2017, published a list of 163 deposit-taking saccos with full licences, and a further 12 with temporary six-month permits.

This is lower than the 177 credit unions, including 13 with temporary permits, licensed by Sasra last year, 181 saccos in 2015 and 215 in the year 2014.

The dozen saccos jointly control Sh5.7 billion in assets, Sh3.2 in member deposits, and a lon book of Sh3.55 billion as at December 2015, according to data from Sasra.