The Central Bank of Kenya (CBK) asked Sacco regulator, Sacco Societies Regulatory Authority (SASRA), to regulate the giant Kenya Union of Savings and Credit Co-operatives Limited (KUSCCO)’s unregulated deposit-taking business two years ago.
The Sacco lobby had written to Central Bank of Kenya (CBK) more than two years ago, claiming that SASRA had left the Union out of its regulatory oversight lense.This was despite KUSCCO being one of the biggest players in the Sacco sub-sector.The giant union has a membership of over 4,000 Saccos, and holds over KSh 20 billion in member funds and deposits.
In a series of letters seen by The Kenyan Wall Street, the issue begun with a February 25th 2022 letter from KUSCCO members to then CBK Governor Dr Patrick Njoroge In it, KUSCCO members claimed that the reason for the omission stems from the fact that their origin is an umbrella advocacy body.
In a follow up communique to SASRA Chief Executive Officer (CEO) Peter Njuguna, dated March 17th 2022, CBK said KUSCCO had engaged in commercial activities that include deposit-taking and lending activities. Members of KUSCCO have also since admitted that they have gone ahead and engaged in other additional activities that did not have a nod from SASRA.
In the communique, then Governor Dr Njoroge said SASRA has a role to play in ensuring the sustainability and financial stability of deposit-taking Saccos. SASRA appears to have ignored these concerns, leaving KUSCCO to operate in a legal vacuum that has now become a major issue in the larger plan to formalise its three decade-old inter-lending facility.
“…given the matter falls within your regulatory and supervisory remit, we believe that SASRA is best suited to look into concerns raised in this matter,” Governor Njoroge wrote in the March 17th letter.
KUSCCO long serving Managing Director George Ototo and National Chairman George Magutu suddenly resigned without a word on January 15, 2024.The KUSCCO Board went ahead to appoint David Langat from Imarisha Sacco as its new chairman while Arnold Munene was picked as acting managing director with effect from January 15, 2024.KUSCCO was registered on 19th September 1973.
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