The Sacco Societies (Amendment) Bill, 2025
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New Licensing Regime for Secondary Saccos
The Bill introduces a requirement for any secondary co-operative society conducting central liquidity and shared services business to be licensed by SASRA. Under Section 28A, thirty or more licensed Saccos may form a secondary co-operative society to manage reserve accounts, provide shared payment platforms, and facilitate inter-Sacco lending.
KSh 3 Million Fine for Violating Liquidity Rules
Under the newly inserted Section 28I, any person who contravenes the provisions of the central liquidity and shared services business framework commits an offence. Upon conviction, they are liable to a fine not exceeding KSh 3 million, imprisonment for a term not exceeding five years, or both.
Strict Prohibitions on Retail Lending and Trade
Under Section 28C, secondary co-operative societies undertaking central liquidity and shared services business are barred from:
- Transacting in deposit-taking with natural persons
- Lending directly to natural persons
- Undertaking wholesale or retail trade
- Investing in venture capital
Deposit Guarantee Fund Trustees Restructured
The Bill amends Section 56 of the Act to reform the Board of Trustees of the Deposit Guarantee Fund. The Board will consist of a non-executive chairperson appointed by the President with at least fifteen years of professional experience in financial supervision, banking, law, or economics, alongside representatives from the National Treasury and Sacco state departments.
Bill No.
No. 32 of 2025
Gazette No.
Supplement No. 106 of 2025
Sponsor
Kimani Ichung'wah
Background
The Sacco Societies (Amendment) Bill, 2025 aims to amend the Sacco Societies Act, Cap. 490B, to enable the establishment, licensing, and regulation of secondary Sacco societies. These institutions facilitate shared financial services and manage central liquidity for primary member Saccos. The Bill also seeks to operationalise and restructure the Deposit Guarantee Fund (DGF) to secure member deposits against Sacco insolvencies.
Key Amendments
Establishment of Secondary Saccos (Part IIIA)
- Formation: Thirty or more licensed Sacco societies may form a secondary co-operative society to run a central liquidity and shared services business under Section 28A.
- Permitted Activities (Section 28B): Authorized activities include maintaining liquidity reserve accounts, short-term lending to member Saccos, participating in the inter-bank market (subject to CBK compliance), and providing shared transactional payment instruments.
- Prohibited Activities (Section 28C): Secondary Sacco societies are strictly prohibited from dealing with natural persons (either for lending or deposit-taking) and engaging in wholesale/retail trade or venture capital investments.
Restructuring the Deposit Guarantee Fund (Section 56)
- Reconstitutes the Board of Trustees to feature a Presidentially appointed chairperson with 15+ years of financial sector experience.
- Restricts membership eligibility by disqualifying any individual currently serving as an officer, director, partner, or auditor of any active Sacco society in Kenya.
- Section 57A introduces a standard good-faith personal liability protection clause for members and staff of the Board of Trustees.
New Obligations
- Licensing: A secondary co-operative society must apply to SASRA in the prescribed form and pay licensing fees before initiating central liquidity or shared services operations.
- Financial Sufficiency (Section 28F): Licensed secondary Saccos must meet continuous capital and liquidity adequacy requirements, alongside maintaining a minimum holding of member Saccos' deposits in the Central Liquidity Fund.
- Code of Conduct (Section 28D): Licenced institutions must develop and adopt a formal binding code of business conduct for all members.
- Fit and Proper Approvals (Section 28G): Every board director and senior officer must pass a fit and proper assessment by the Authority before assumption of office.
Penalties
- General Offences (Section 28I): A violation of the central liquidity and shared services business provisions carries a fine of up to KSh 3 million, imprisonment for up to five years, or both.
- Administrative Penalties: SASRA is empowered under Section 28J to introduce regulations establishing specific administrative penalties for non-compliance.
Transitional Provisions
- Suspension of Claims Payments (Section 59A): No payment of claims shall be made out of the Deposit Guarantee Fund until a commencement date is formally appointed and published in the Gazette by the Cabinet Secretary in consultation with the Treasury.
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