This is an example of lending requirements in Sacco societies and most requirements here might be the same and some could be slightly different. This example captures majority of lending requirements in Sacco Societies across the country so I can safely say!

1. EXAMPLE OF
LENDING
REQUIREMENTS
IN A SACCO
BY STEPHEN KIRITU
MWANGI
A CO-OPERATOR

2. 1. For a member of a Sacco Society to qualify for a
Co-operative loan: -
a) The Society must have been in existence and active
for a period of not less than six months from the date
of its registration.
b) A member must have completed at least six months
membership and contributed
not less than Kshs. 3000/= in shares/ deposits.
c) A member who withdraws from the Society and re-
joins later will be treated as a new member for the
purpose of this loan policy.

3. d) Savings contribution paid in cash or cheque
outside the check- off system shall remain in the
Society for at least six months to qualify for any loan.
e) Any amount of savings through the check-off
system in excess of one third of a
member’s basic salary shall remain in the Society for
a period of six months to
qualify for any loan.
f) A member applying for a loan should undertake to
pledge future salary from any
employer towards loan repayment before such a loan
is granted by the Society.

4. 2. a) All loans shall be restricted to members only and
shall be approved by the Credit Committee or as
provided herein. No member of the loan approving
Committee shall be present when his/her loan
application is being considered.
b) Employees of the Society shall be eligible for
membership but are not eligible to become members
of a Committee or any other sub-committee in the
Society.
c) An employee who tempers with his/her monthly
share contribution and loan repayment is liable for
prosecution under Section 94 of the Co-operative
Societies Act.

5. 3. The rate of interest on all loans inclusive of all
charges incidental to granting of the loan
shall be as approved by the members/delegates at an
ADM/AGM or Board.
4. a). No members shall leave the common bond by
virtue of transfer or retirement,
he/she may continue to be a member of that Society
or may transfer all his/her shares to the Society which
he/she intends to join under the new employer.

6. b) All new applicants for membership must provide
written proof from their previous employer and
Management Committee of the previous Society
that they do not have outstanding liability in the
Society and that they are no longer members of
same Society. In case a member has any
outstanding liability with the previous Society, he
shall be required to pledge future income to repay
the loan of the previous society and show proof of
the same to his/her new society.

7. 5. a) All applications for loans shall be made on
prescribed forms by the Society and shall in each
case set out the amount applied for, the purpose of
the loan, terms of repayment and type of security
provided. The loan application form shall be fully
completed and supported by at least one most recent
payslip (or a letter from the employer confirming the
applicant’s ability to repay the loan comfortably).

8. b) It shall be an offence for an
applicant, Society employee or book-
keeping Service employee to give
false information regarding shares,
loans and guarantees.

9. 6. Loan applications shall be considered in the order
in which they are received or as shall be determined
by the Board.
7. The maximum amount of loan granted to a member
shall not exceed three times a member’s shares but
subject to maximum of 5% of the Society’s total share
capital and reserves. Where total deductions exceed
two thirds of a members basic salary, the loan shall be
reduced accordingly.

10. 8. The Society shall maintain 10% cash reserve of
the total members’ savings and
in accordance with the By-laws at least 50% of the
deposit account and shall not
be available for granting loans. Such reserves shall
be updated monthly.
9. Provided that a member is qualified, an additional
loan can be granted by the
Credit Committee.

11. Thank
you