The State has revived plans to compel Savings and Credit Co-operative Societies (saccos) to share information with credit reference bureaus (CRBs).
The government has republished the Sacco Societies (Amendment) Bill, which seeks to overhaul how saccos operate.
This follows the Court of Appeal judgment that nullified the Sacco Societies (Amendment) Bill 2018, alongside 23 other laws for lack of participation by the Senate.
The Bill, which originated from the National Assembly in October 2019, aligns the Sacco Societies Act 2008 with the Banking Act and the Microfinance Act 2008, bringing credit information-sharing under a single regulatory framework.
At the moment, saccos are obligated to share positive credit information among themselves but only share data with CRBs under the third parties’ category.
The category, as provided under the CRB Regulations 2013, requires saccos to seek prior approval from the Central Bank of Kenya (CBK) and obtain consent from their customers before sharing the credit information.
The Bill mandates saccos to share both positive and negative information of their customers with licensed CRBs.
In a ruling delivered in October 2020, the Court Appeal said the Senate’s role in legislation is not optional and that it was illegal for the National Assembly to ‘ignore’ the Senate.
The Sacco Societies (Amendment) Bill, as passed by the National Assembly, has been republished in compliance with the judgment to allow for consideration by both Houses in line with Article 109 (4) of the Constitution.
“This Bill has been republished following the Court of Appeal judgment in Civil Appeal No E084 of 2021, which nullified the Sacco Societies (Amendment) Bill 2021 for want of participation by the Senate,” said Majority Leader Amos Kimunya, who sponsored the Bill said.
He republished the Bill on November 25, 2021, and tabled it in Parliament on November 29.
If the Bill sails through, saccos will, however, be required to issue pre- and post-listing notices to their customers as required by law.
“A sacco society shall, in the ordinary course of business exchange information on performing and non-performing loans as may be specified by the authority and to such extent as may be prescribed through regulations made under the Act.”
The proposed changes further provide for the registration and licensing of Saccos as deposit-taking savings and credit co-operatives.
It requires deposit-taking Saccos to incorporate the phrase “DT-SACCO” or any of its derivatives.
If the Bill is assented into law by President Uhuru Kenyatta, deposit-taking Saccos will have 12 months to comply with the new law.
There are more than 2,286 non-deposit-taking Saccos operating in Kenya, holding billions of shillings in assets.
