The Kenya Union of Savings and Credit Co-operatives (KUSCO) has obtained ex-parte orders dated 15th November 2023 to block the Sacco Societies Regulatory Authority (SASRA) from inspecting its operations.
This comes after SASRA had issued a notice to KUSCO on 10th November 2023, requiring it to submit its financial statements and other documents for scrutiny.
KUSCO is a deposit-taking institution that holds over Kes 20 billion of deposits from the cooperative movement in Kenya.
However, unlike other Saccos, it has not been licensed by SASRA to carry out deposit-taking and lending activities.
This has raised concerns among its members and other stakeholders about the safety and soundness of their funds.
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The issue of KUSCO’s regulation was first raised in March 2022 by the then Governor of the Central Bank of Kenya, Dr. Patrick Njoroge, in a letter to SASRA.
He noted that KUSCO members had complained and expressed fear that their funds were not protected, stating that KUSCO was engaged in deposit-taking and lending activities without a valid license and that SASRA was the appropriate institution to regulate and investigate KUSCO.
However, the Jubilee government did not implement the recommendations of the CBK governor.
It was only after the Kenya Kwanza government under President William Ruto came to power that SASRA was mandated to protect Sacco members’ deposits and enforce compliance with the law.
KUSCO has now challenged SASRA’s authority and moved to court to stop the inspection process.
It claims that SASRA has no jurisdiction over it and that it is only accountable to its members and the Commissioner for Co-operative Development.
It also argues that SASRA’s notice was issued in bad faith and without due process.
SASRA has vowed to contest KUSCO’s court orders and proceed with the inspection as soon as possible, warning other Saccos that are operating without a license to comply with the law or face legal action.
SASRA’s director-general, John Mwaka, said that the regulator’s main objective was to safeguard the interests of Sacco members and promote the stability of the Sacco sector.