---
description: >-
  The Regulations seek to regulate non-deposit taking SACCOs given the risks to
  the members of the public and the wider financial system.
---

# 9.	Sacco Societies (Non-Deposit Taking Business) Regulations 2020

Quick Link: [https://new.kenyalaw.org/akn/ke/act/ln/2020/82/eng@2022-12-31](https://new.kenyalaw.org/akn/ke/act/ln/2020/82/eng@2022-12-31)

·         These Regulations became effective on 1 January 2021 after publication vide Legal Notice No. 82 of 2020.

·         They were a consequence of the findings of a [report of the Taskforce on the development of regulations for non-deposit taking Saccos](https://ushirika.go.ke/wp-content/uploads/2020/07/Task-Force-on-the-Development-Regulations-for-Non-Deposit-Taking-Saccos.pdf).

·         In the main, the Regulations seek to regulate non-deposit taking SACCOs following concerns that these SACCOs, despite not taking deposits from members of the public, posed risks to the financial system thereby necessitating a monitoring of their operations.

·         They expanded the mandate of the regulator, the Sacco Societies Regulatory Authority (SASRA), to also regulate these SACCOs.

·         The Regulations seek to improve the governance of large non-deposit taking Saccos in light of recent cases of fraud relating to such institutions.

·         It is however noted that there is currently a [National Cooperative Development Policy](https://www.ushirika.go.ke/wp-content/uploads/2020/07/national-co-operative-development-policy.pdf), developed in 2019, that is awaiting adoption. The Policy seeks to bring all the financial institutions under the ambit of the regulator, SASRA, including the non-deposit taking SACCOs which were not under the regulator’s ambit.\[1] This needs to be fast tracked.

·         In particular, the Regulations require the said Saccos to provide particularized details to SASRA within 30 days of issuance of a notice requiring such details; the core capital must not be less than  8 percent of the society’s balance sheet; submission of a three year business plan and feasibility study; submission of ‘fit and proper test form’ relating to senior management of Saccos to SASRA; independent onsite inspection by SASRA to assess the institutional infrastructure, risk management policies, internal control systems and Management Information Systems.

·      Some of the envisaged legislative and policy changes include: the setting up of a deposit protection scheme (SACCO Deposit Guarantee Fund) for members like those of commercial banks; establishment of the SACCO Fraud Investigation Unit; and prudential supervision of non-deposit taking SACCOs.\[2]\


***

\[1] Brian Ngugi, “Kenya: New Law Set to Beef up Sacco Regulators Roles” (_allAfrica.com_ March 22, 2021) <[https://allafrica.com/stories/202103220421.html](https://allafrica.com/stories/202103220421.html)> accessed November 6, 2021.

\[2] <[Microsoft Word - Press Release - 2020 Regulations requiring non-deposit taking SACCOs to be regulated by SASRA take effect.docx (kilimo.go.ke)](https://kilimo.go.ke/wp-content/uploads/2021/02/Press-Release-2020-Regulations-requiring-non-deposit-taking-SACCOs-to-be-regulated-by-SASRA-take-effect.pdf) >
