Top managers of savings and credit co-operative societies (saccos) will undergo fresh vetting by the regulator after a proposed law got Parliamentary nod.
The Sacco Societies (Amendment) Bill entered the third reading at the National Assembly on Tuesday, the stage of a legislative process in which a Bill is read with all amendments and given final approval by a legislative body.
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 to ensure compliance with prudential and ethical standards.
The “fit and proper test” was proposed by a taskforce formed by the Industry, Trade and Co-operatives Cabinet Secretary Peter Munya.
This includes members of the board of directors, the supervisory committee, chief executive officer and senior management staff including heads of the information communication and technology, the internal audit, the credit management and the finance functions. The proposed rules are part of a government plan to re-write the outdated policies guiding the conduct of non-deposit taking savings and credit cooperative societies.
Additionally, the saccos will be required to start reporting every quarter financial performance to the regulator 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 such that the regulatory returns are submitted by 15th of the month following the end of a quarter (for example April 15, July 15, October 15 and January 15),” say the draft rules.
The non-deposit-taking sacco societies are governed by the Cooperative Societies Act.
They are registered by the Commissioner for Cooperative Development (CCD) to mobilise savings from their members and also provide credit facilities against the collateral of such savings. But they are not authorised to take withdrawable deposits or present themselves to the public as deposit taking entities.