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Sacco Societies Act

  An Act Of Parliament To Make Provision For The licensing, Regulation, Supervision And Promotion Of Sacco Societies, to Establish The Sacco Societies Regulatory Authority And For Connected Purposes

· Providing for laws relating to the licensing, regulation, supervision and promotion of Sacco societies

· To establish the Sacco Societies Regulatory Authority

SACCO is the short title for Savings and Credit Cooperative Organizations.

A Sacco is normally owned, managed and governed by its members who share similar interests. E.g. they may be working for the same employer, belonging to the same union, working/living within the same society.

In Kenya Sacco are regulated by the Sacco Societies Act No 14 of 2008.

· Licensing Sacco Societies to carry out their day to day activities

· Control and supervise Sacco Societies

· Hold, manage and apply the General Fund of the Authority

· To collect contributions

· Do all other legal things as directed by the cabinet secretary

· Perform such other functions authorized by the law

This board performs the oversight and management function of the authority.

· The chairperson to be appointed by the cabinet secretary

· The permanent secretary to the treasury or his/her representative

· The commissioner or his/her representative

· The governor of the central bank or his/her representative

· four members not being public officers, appointed by the cabinet secretary by virtue of their knowledge, and possession of a minimum of ten years’ experience, in co-operative practice and management, law, finance or economics

· The chief executive officer appointed by the Board in consultation with the cabinet secretary

· A member of the National Assembly or the county assembly

· A director or employee of a Sacco society or cooperative society

· Auditor of a Sacco society or a cooperative society

· A person who is prohibited from being a director or to take part in the management of a cooperative or financial institution by the Commissioner under the law

· Supervise, control and run the resources of the authority in order to promote the functions of the authority

· Open and operate bank accounts

· Determine the necessities to be made for the authority

· Award contracts

· Enter into association with other bodies and organizations within and outside Kenya to promote the functions of the authority

· Investing

· Receive donations and make legitimate payments for the furtherance of the objects and functions of the Authority

The law requires that Sacco Societies need to obtain a licence issued by the Sacco Societies Regulatory Authority in order to carry out their business. This is provided under section 23 of the Act and Regulations 4.

· Application for a License - fill the “application form for a licence”-Form 1 [SASRA 1/001] contained in the first schedule of the regulations. This form must be accompanied by the following;

  1. A certified copy the Sacco society’s registration certificate issued under the cooperative societies Act.
  2. A verified official notification of the Sacco Society’s registered head office and branches.
  3. A certified copy of the Sacco society’s bylaws.
  4. A certified copy of minutes of the general meeting resolution authorizing the application for deposit taking license.
  5. The name of the proposed chief executive officer.
  6. Certified copies of the financial statements for the last three years.
  7. Evidence that the Sacco society has adequate capital by filling and submitting the capital adequacy return form provided in form 1 of the 2nd schedule of the regulations.
  8. A four year business plan and feasibility study detailing the following;
  1. The vision and mission of the Sacco society
  2. Scope and nature of business operations
  3. Economic and financial environment
  4. Organizational structure and management
  5. Financial and risk analysis
  6. Projected financial statements and analysis indicating ways on how the institution will meet its standards within the plan period as regards the following;
  1. Capital adequacy-indicate sources of capital over the plan period
  2. Loans quality and provisioning
  3. Liquidity
  4. Investment-following the provisions of regulation 48 on limits on property, equipment and financial assets
  5. Control measures and monitoring procedures
  6. Duly filled “fit and proper test forms” contained in the first schedule of the regulations labeled as SASRA 01/002
  7. An application fee of Kshs 3,000/=

· Letter of Intent - Where the authority is satisfied of the fulfillment of the requirements in step one above, it shall proceed to issue a letter of intent to the Sacco society for the provision of the following;

  1. Institutional infrastructure or business premises appropriate for deposit taking Sacco business. This includes; a banking hall, adequate working space, physical security measures, strong room and safe.
  2. Management information system- the information management system must be capable of performing and accounting for all transactions and providing the minimum reports required by the authority in an accurate and timely manner. The system should provide for data back-up.
  3. Risk management policies and internal control systems – The authority will require the Sacco society to develop a risk management policy framework addressing each of the risks identified. The following important aspects must be addressed;
  1. Clear definition of responsibilities of the Board and management in development, implementation and review of the risk management systems;
  2. Risk monitoring and information systems;
  3. Adequate policies, procedures and limits;
  4. Adequate internal controls and audit specific to each risk area.

· Onsite inspection – where the requirements specified in the letter of intent are accomplished, the Sacco shall notify the Authority so that an independent on-site inspection can be carried out to determine if the requirements were indeed fulfilled. The inspection shall be carried out within 30days from the date of notification.

· Letter of compliance – Where the authority is satisfied that the Sacco society has complied with all the conditions as stated in the letter of intent, it shall issue a letter of compliance allowing the Sacco society to pay the license fee within 30days.

· Issuance of license – The Authority shall issue a license to the Sacco society upon the payment of Kshs 50,000/= license fee for head office and Kshs 20,000/= for each branch. The license shall be issued within 14days from the date of payment of the license fee.

NB: Applications and correspondences should be addressed to;

The Chief Executive Officer

The SACCO Societies Regulatory Authority

Britak Center, 1st Floor, Upper Hill

P.O Box 25089-00100


By notice in writing the Authority may revoke a licence where;

· The Sacco society ceases to carry out deposit taking business in Kenya

· The Sacco society collapses or is deregistered under the law.

· The Sacco society fails to observe the law or the conditions provided in the licence

· The Sacco society fails to pay the annual licence fee

· The Sacco society does not hold at least 50% of the capital requirements

· The Sacco society has engaged in criminal or fraudulent acts likely to cause;

  1. Insolvency or collapse of the Sacco society
  2. Substantial loss of assets or earnings or weaken the operation of the Sacco
  3. Serious prejudice to the interests of the Sacco society members

· A core capital of not less than Kshs 10 million

· A core capital of not less than 10% of total assets

· Institutional capital of not less than 8% of total assets

Core capital of not less than 8% of total deposits

· Foreign trade operations

· Trust operations

· Investing in enterprise capital beyond the limit allowed

· Purchasing or acquiring land for other purposes other than those of the Sacco Society

· Doing Sacco Society business with non-members

· Such other activity given by the authority.





Disclosing information while in performance of official duty

  Liable to a fine below Kshs 100,000/= or to a jail term below 1year or to both


Carrying out of deposit-taking business without a licence

   Liable to a fine below Kshs 500,000/= or to a jail term below 3years or to both

32(1) & (2)

Change of place of business without approval from authority

· Opening a new Sacco society branch without approval from authority

· Opening a Sacco society without approval from authority

   Liable to a fine below Kshs 100,000/= or to a jail term below 3years


Granting a loan/credit beyond the prescribed limits

· No loan or credit facility should be granted against the security of the core capital of the Society

· A loan/credit facility which in the total exceeds a society’s core capital should not be granted.

   Liable to a fine below Kshs 100,000/= or to a jail term below 2years or to both


Default by officer

An officer failing to ensure the compliance of the Sacco society with the law and regulations

An officer failing to take the necessary steps to secure the accuracy of any statement or information submitted under the Act and regulations

An officer failing to supply required information to the cabinet secretary or the Authority

  Liable to a fine below Kshs 100,000/= or to a jail term below 3years or to both


Falsifying books of accounts or other documents with intent to deceive

Signing/issuing/publishing/transmitting a false document to a government official

Obtaining a forged signature on a document with intent to deceive

Destroying Sacco society documents with intent to deceive

Engaging in a transaction in which there is a conflict of interest

Taking part in a negotiation in which there is a conflict of interest

  Prohibition from holding office in any Sacco society


Paragraph 6(3) & (4) of the Regulations

Participation in Sacco society affairs by an officer upon revocation of a Sacco society licence

  Liable to a fine below Kshs 100,000/= or to jail term below 12months or to both

Paragraph 15(2) & (3) of the Regulations

Engaging in prohibited business activities by a Sacco society

  Liable to a fine below Kshs   100,000/= and further liable upon being called upon by the authority to pay a penalty charge of Kshs 100,000/=

Paragraph 20 of the Regulations

Contravention of the regulations on place of business

    Liable to a fine below Kshs 100,000/= or to a jail term below      3years or to both

Paragraph 75 of the Regulations

Failing to submit reports and information required by the Authority

Submitting incorrect reports and information to the Authority

Violating the terms of a letter of understanding and agreement

Violating a cease/desist order

  Liable to a fine below Kshs    100,000/=

Paragraph 81(5)

   Non-payment of annual premiums


Revocation of Sacco society licence by authority

In the case of a managing officer-liable to a fine below Kshs 100,000/= or to a jail term below 12months

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