SASRA authorisation for non-deposit-taking SACCOs: what the 2020 Regulations require
The three triggers, the application and its fees, the capital and liquidity floors, every return with its form and deadline, and the minimum the Regulations set for the SACCO’s own software — each with its regulation number.
What the Regulations are
The Sacco Societies (Non-Deposit-Taking Business) Regulations, 2020 were published as Legal Notice No. 82 in Kenya Gazette Supplement No. 67 of 5 May 2020, made under section 68(1) of the Sacco Societies Act, 2008. They specify which non-deposit-taking business falls under SASRA and set the operating standards for it (reg. 3). Commencement was left to a later Gazette notice (reg. 1(2)); the SASRA supervision report for 2024 records 178 SACCOs authorised under them, so the regime is in force in practice.
A SACCO authorised under these Regulations is a "Regulated Non-withdrawable deposit-taking SACCO" and must carry that phrase, or "Regulated Non-WDT-SACCO", in its name (reg. 7(1)). Using the words without authorisation is prohibited (reg. 7(2)).
Who must be authorised
Written authorisation from SASRA is required before a SACCO carries on "specified non-deposit taking business" (reg. 5(1)), which reg. 4(1) defines as business where any of the following applies:
- Non-withdrawable deposits from members equal or exceed KES 100 million (reg. 4(1)(a)). There is no grace period once the threshold is crossed; the prohibition in reg. 5(1) applies.
- Membership or share capital is mobilised through digital or other electronic payment platforms (reg. 4(1)(b)).
- Membership or share capital is mobilised from persons ordinarily resident outside Kenya (reg. 4(1)(c)).
For the second and third triggers, reg. 4(2) says a SACCO "shall not mobilise ... principally through digital or other electronic payment platforms or from persons ... outside the country unless it has been authorised to do so in writing". The word "principally" appears in reg. 4(2) and not in reg. 4(1); the text does not reconcile the two. A SACCO planning a digital membership channel should treat written authorisation as a precondition and take counsel's view on where "principally" bites.
Applying for authorisation
The application is Form 1A (reg. 5(2)) with fit-and-proper forms (Form 1B) for every director, supervisory committee member, the chief executive and senior managers including the heads of ICT, internal audit, credit and finance (reg. 5(3)(a)); the registration certificate and by-laws; a three-year business plan and feasibility study; a certified general-meeting resolution; three years of audited accounts where they exist; evidence of adequate capital; and a non-refundable application fee of KES 3,000 (reg. 5(3)(b)–(h)).
SASRA inspects the premises before deciding, looking for working space, a management information system "able to account for all transactions" and produce minimum reports, risk policies and internal controls, and governance structures (reg. 5(4)). The authorisation fee is KES 50,000 for the head office and KES 10,000 for each other place of business (reg. 5(6)); the certificate is Form 1C (reg. 5(7)).
Authorisation is renewed annually: by 30 November each year the SACCO pays KES 30,000 for the head office and KES 10,000 per authorised place of business and submits annual data (reg. 9(2)). Not renewing carries a penalty of up to KES 100,000 (reg. 9(4)).
Where a SACCO carries on specified business without authorisation, SASRA may order it to stop taking further non-withdrawable deposits, notify employers to cease remittances, direct banks and payment service providers to stop receiving funds for it, publish a notice and act against its officers (reg. 8). Revocation grounds include holding less than a quarter of the prescribed capital, ceasing the business, unpaid fees and fraud (reg. 10(1)); officers in place at revocation may not join another SACCO without written approval (reg. 10(4)).
Capital, liquidity and lending limits
| Standard | Requirement | Regulation |
|---|---|---|
| Core capital | At least KES 5 million, 8% of total assets and 5% of non-withdrawable deposits; at least half from retained earnings and reserves | reg. 11(1) |
| Liquid assets | At least 10% of non-withdrawable deposits and short-term liabilities | reg. 14(3) |
| External borrowing | Not more than 25% of total assets without SASRA's written permission; only to fund the loan book | reg. 35(1), (5) |
| Single member | Not more than 10% of core capital without written approval | reg. 32(4) |
| Insider loans | Aggregate not more than 10% of the gross loan portfolio | reg. 36(4) |
| Land and buildings | Not more than 5% of total assets (10% with equipment) | reg. 46 |
| Non-government investments | Not more than 40% of core capital | reg. 46(4) |
Loans are classified from one day past due: watch, then substandard, doubtful and loss, with loss at 360 days or more than twelve missed instalments (reg. 40(5)), and provisioned at 1%, 5%, 25%, 50% and 100% respectively (reg. 42). Dealing in cryptocurrencies and transacting with non-members are prohibited (reg. 16). Every new loan product needs a feasibility study and SASRA approval before launch (reg. 34).
Returns and deadlines
| Return | Form | Frequency and deadline | Regulation |
|---|---|---|---|
| Capital adequacy | 2A | Quarterly, by the 15th of the month after quarter-end | reg. 13(1) |
| Liquidity statement | 2B | At least quarterly | reg. 15(1) |
| Non-withdrawable deposits | 2C | Quarterly, by the 15th of the following month | reg. 24 |
| Insider lending and loan performance | per SASRA guidelines | Monthly, by the 15th | reg. 36(5) |
| Risk classification and provisioning | 2D | Quarterly, by the 15th of the following month | reg. 44 |
| Investments | 2E | Annually, by 15 January | reg. 49 |
| Comprehensive income, financial position, other disclosures | 2F, 2G, 2H | Quarterly, by the 15th of the following quarter | reg. 50 |
| Certified board minutes | — | By 15 July and 15 January | reg. 61(3)(b) |
| Complaints report | — | Quarterly; complaints unresolved for three months within 24 hours | reg. 77(3) |
| Audited accounts | — | To SASRA within three months of year-end; AGM within four months | reg. 56(1), (4) |
The forms in the Second Schedule are not fully consistent with the regulations they implement: Forms 2A and 2B describe themselves as monthly, and Form 2E as quarterly, where the regulations say quarterly and annual. Form 2H prints a 10% core-capital ratio where reg. 11 says 8%. Ask SASRA which reading it enforces before building a filing calendar. Returns are filed through SASRA's electronic system (reg. 94(1)), in Kenya shillings in thousands, signed by two authorised signatories (Second Schedule notes). A missing or incorrect return can cost up to KES 100,000 per incident after 14 days' notice (reg. 87).
What the Regulations require of the SACCO's software
Regulation 88(2) lists the minimum capabilities of the management information system: a real-time relational database; member records including photographs and signatures; drill-down to individual transactions; declining-balance, annuity and balloon interest methods; loan appraisal on shares, salary and deductions; real-time posting to the general ledger; loan classification by performance and purpose; a report designer with export to Excel, Word, CSV and PDF; "integration with other payment systems"; user profiles and access rights; a real-time audit trail; daily off-site backup; and rollback on hardware failure.
Before engaging any system or infrastructure provider, the SACCO must carry out due diligence covering the provider's legal and tax compliance, technical capacity, ownership and staffing continuity, financial condition, cybersecurity audit and attack monitoring, and risk management (reg. 89(1)); SASRA may add requirements by circular (reg. 89(2)), and has done so in the vendor circular covered on SASRA IT audit requirements. Statements may be delivered to a member's disclosed electronic address (reg. 70(3)), and every member is entitled to a free statement each quarter (reg. 70(2)).
Members' money on exit
Share capital is never refunded; on exit it may only be transferred to other members (reg. 22(2)). Deposits are refunded within 60 days of written notice, once the member's debts and pledged guarantees are cleared (reg. 23(4), (6)). Changes to products or tariffs need at least 30 days' written notice and a penalty-free opt-out (reg. 68(4)–(5)).