11 saccos on permits curb over low capital
The Sacco Societies Regulatory Authority (Sasra) has issued 11 saving societies a restricted licence for failure to maintain the prescribed core capital of Sh10 million and above.
Sasra says in the latest Sacco Supervision Report that the move was necessary after the 11 deposit-taking (DT) saccos failed to meet even half of the prescribed capital base.
“A total of 11 DT-Saccos had a core capital of less than Sh5 million, and are operating on restricted licences,’ said Sasra which in the year ended December 2017 also revoked permits of two saccos for failing to meet financial obligations.
Two others survived even though their core capital was above Sh5 million but below Sh10 million required by law. This means that 161 DT-Saccos were able to maintain the prescribed core capital in 2017, which is a drop from the 168 DT-Saccos that were compliant the previous year.
Sacco Societies Act 2010 gives the regulator powers to restrict the licence of a Sacco that fails to maintain capital adequacy ratios including prohibiting affected entities from accepting further deposits or other lines of credit.
A licence may be restricted by imposing a limit on its duration for a period not exceeding one year or through additional conditions for the protection of depositors as the authority may deem necessary according to the law.
DT- Saccos are also required to maintain a core capital to total assets ratio of 10 per cent but 28 sacco Societies remained non-compliant.
In regard to the core capital to total deposits ratio, 11 saccos failed to meet the eight per cent ratio. This was an increase in non-compliance from the six recorded in 2016.