Hundreds of small unregulated savings and credit co-operative societies (Saccos) with more than Sh100 million and those operating online risk closure after they failed to meet the June regulatory deadline for registration.
Only 157 saccos beat the June 30 deadline for application to the Sacco Society Regulatory Authority (Sasra), out of which 25 have concluded the registration process.
The regulator had given the saccos six months to register with those in breach barred from undertaking the specified non-deposit taking business unless they complied with the Sacco Act and Regulations 2020.
“Sasra has today issued 25 specified non-withdrawable deposit-taking saccos with authorisation certificates following compliance to the new 2020 regulations that came into effect on January 1, 2021,” Sasra chairman John Munuve said in a statement yesterday.
The regulator introduced new regulations last year to monitor sacco operations including filing regular audits on capital and liquidity.
The government seeks to police pooled funds that have accumulated more than Sh100 million from members. It also wants to track tech-savvy non-deposit taking saccos that collect member contributions online and on mobile phones and those that source for funds in the diaspora. Sasra will now regulate them.
Despite having thousands of societies operating as saccos, Kenya only regulates 175 entities, which collect member deposits and issue loans.
The deposit-taking saccos, which hold assets worth Sh487.4 billion, are regulated by the Sacco Societies Regulatory Authority that requires submission of timely audits and reserves to back their levels of risk.
The rest operate with a certificate from the ministry of cooperatives as non-deposit taking saccos and often fail to submit their audits for years.
They accept term and non-withdrawable deposits and provide loans to their members and a few other financial services which are not keenly regulated.
The international Monetary Fund says over 2,286 savings and credit cooperative societies that have been allowed to operate without tight regulations are holding up to Sh153.2 billion in assets posing a serious financial risk to the system.
The IMF technical team was able to dig up that the saccos loosely regulated by the commissioner of cooperatives had given out loans of up to Sh118.22 billion and had taken up peoples deposits of up to Sh117.50 billion.
Previous IMF missions in 2015 and 2016 discussed the possibility to include non-deposit-taking SACCOs in monetary data.
At the time of the previous missions, no information was available to be able to assess their size including total assets and deposits as non-deposit-taking SACCOs institutions did not regularly report their balance sheet data to the Commissioner for Cooperative Development.
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