Savings and credit co-operative societies (Saccos) will be compelled to share information with credit reference bureaus (CRBs) after the Senate approved a Bill that seeks to amend the Sacco Societies Act, 2008.
The Bill, which originated from the National Assembly last October, 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 information with CRBs under the third parties’ category.
The category, as provided under the CRB Regulations 2013, requires saccos to seek prior approval of 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.
The 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. The Bill mandates a co-operative society that has been registered or incorporated as a deposit-taking savings and credit co-operative society or sacco society to, within one year of registration, obtain a licence from the Sacco Societies Regulatory Authority to operate as a deposit-taking savings and credit co-operative society or a sacco society.
There are more than 2,286 non-deposit taking saccos operating in Kenya, holding billions of shillings in assets.