Kenya is working on new rules to tame deposit-taking Saccos (DT-Saccos) that fleece members through inflated charges, delays in reimbursement of deposits, and “reckless” lending and debt collection.
This comes amid concerns over mismanagement, fraud and bad loans that are putting the stability of the DT-Sacco subsector at risk.
The EastAfrican has learnt that the Saccos Sector Regulatory Authority (Sasra), in collaboration with the National Treasury, has hired a consultant to come up with new market conduct regulations. The move is part of the government’s efforts to restore sanity in a sector that controls over $5 billion in members’ savings.
Sasra, with funding from the National Treasury’s Financial Sector Support Project, has appointed industry expert Gianfranco Vento to develop the market conduct policy as well as legal and regulatory framework for Sacco societies in Kenya.
Through a circular to the chief executives of DT-Saccos, seen by The EastAfrican, the industry regulator said the existing regulatory framework governing the operations of DT-Saccos is inadequate and has left customers exposed to market abuse.
“Lack of adequate emphasis on market conduct regulations has amplified challenges relating to low savings and over-indebtedness, and undermines steps taken to make the DT Sacco subsector more accessible to improve financial inclusion,” said John Mwaka, Sasra’s chief executive.