The Sacco Societies (Amendment) Bill, 2018 was gazetted on 19th January 2018 for placement before the National Assembly.
The objective of this Bill is to amend the Sacco Societies Act, 2008, to provide for the registration and licensing of Sacco societies as deposit-taking savings and credit co-operatives. The Bill further expands the current credit information sharing mechanism to include Sacco societies with other licensed financial institutions. This is intended to align the Act with the Banking Act, the Microfinance Act, 2008, thus bringing credit information sharing under a single regulatory framework.
Under the proposed amendment, Sacco societies will be mandated to share Credit Information with the Credit Reference Bureaus licensed and regulated by the Central Bank of Kenya. In addition, they will be required to share both positive and negative information (full-file profiles). This means that the Saccos Societies will no longer need to obtain their customer consents before sharing information with the bureaus. They will however be required to issue pre and post listing notices to their customers as required by law.
In the past, Saccos were mandated to share positive credit information amongst themselves and it was optional for them to share negative credit information. They were required to do so under Regulations to be issued by the minister in charge of their operations. Unfortunately, no Regulations had been issued and that meant that the Sacco Societies would not effectively share credit information.
As a result, the Sacco Societies would only share information under the 3rd parties’ category as provided under the CRB Regulations 2013. This required prior approval from Central Bank and obtaining of consents from their customers. Where the customers were in default, it became almost impossible for their credit information to be shared as they would simply decline to give their consent.
The proposed amendments have come as a culmination of a lot of effort made by the Credit Information Sharing Association of Kenya in lobbying for legal reforms that ensure a level playing field and result in the expansion of both the width and the depth of Credit Information Sharing.
It is our hope that the amendments will be passed as proposed.