Scores of savings and credit societies (saccos) operating without proper registration face imminent closure in draft regulations by the Savings Regulatory Authority (Sasra).
The tough new rules are intended to weed out fraudulent outfits.
The Draft Sacco Societies (non-deposit taking sacco business) regulations will outlaw the use of the name Sacco for any outfit that is not registered by Sasra.
The regulations come at a time when Kenyans are smarting from huge losses following the collapse of Ekeza and Good Hope Saccos while holding member deposits in excess of Sh2 billion.
“A Sacco society authorised to undertake specified non-deposit taking business shall at all material times use the following words “Regulated NonDeposit Taking SACCO” or “Regulated Non-DT-SACCO” as part of their name,” it says.
Operators that breach the law risk being fined Sh500,000 or serving three years in jail.
A non-DT sacco is described as a society that mobilises membership subscription and share capital through digital or other electronic payment platforms or where total non-withdrawable deposits from members is equal to or exceeds the sum of one Sh100 million.
The regulations bar saccos from dealing in cryptocurrency, foreign trade, trust, custodial, deposit-taking, venture capital investments, underwriting or placement of securities, or lending money to non-members.
Purchase of land will only be done to expand the sacco business within limits prescribed by Sasra.
The Kenya Union of Savings and Credit Co-operatives (Kuscco) chief executive George Ototo said the passing of the new regulations should be speeded up because people using the sacco brand to enrich themselves by fleecing Kenyans of their hard-earned money will be dealt with.
“These Ponzi-schemers must not only be stopped but punished as a deterrent to people tarnishing the sacco brand. It is such people that discourage savers. Let everyone register and subject their saccos to scrutiny,” he said.
It will be mandatory for every sacco to report regularly on their financial status while keeping an up-to-date register providing details of each member, their contacts, shares as well as savings.
This could deter past happenings where Ekeza and other entities hid member registers, making it impossible to establish their true financial position.
“Some people have never liked being placed under regulation but it is good to allow supervision that enhances integrity of the work saccos do,” said Ushuru Sacco chief executive William Pudha.
The unregulated ‘saccos’ are now defined as non-deposit taking businesses that hold non-withdrawable deposits from members equal to or exceeding the sum of Sh100 million. Any entity receiving membership subscription as well as raising share capital through digital or other electronic payment platforms within or in the diaspora also falls under Sasra.
No sacco is to invest in land or buildings without consent from Sasra and no sacco official is to use sacco funds in pursuit of personal interests.
Failure to seek registration could see Sasra halt an entity’s operations with a public advertisement placed in the dailies informing Kenyans of the stoppage.
“Sasra will notify members of the public and employers to immediately cease making any further remittances of non-withdrawable deposits to the Sacco society,” says the draft.
No sacco is to open an office/branch and close the same without Sasra’s consent.
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