How to know if your SACCO is a deposit taking SACCO or not

In recent times, Savings and Credit Co-operatives (SACCOs) have faced heightened scrutiny, particularly concerning the safety of member funds.
To comprehend SACCOs better, it’s essential to delve into the cooperative movement’s roots. Cooperatives are autonomous associations of individuals united to meet common economic, social, and cultural needs through jointly owned enterprises.
SACCOs, specifically, focus on providing financial services, emphasizing credit facilities and fund mobilization for their members, who are both users and owners.
In Kenya, SACCOs are categorized into two segments: deposit-taking and non-deposit-taking. Both segments mobilize savings from members, which serve as collateral for loan advancements. Now, let’s explore how to know if your SACCO is a deposit taking SACCO or not.
How to know if your SACCO is a deposit taking SACCO or not
Deposit-Taking SACCOs (DT-SACCOs)
Deposit-taking SACCOs, as the name suggests, accept deposits from members and offer withdrawable savings account services akin to banks. They provide front-office services where members can conduct transactions such as deposits and withdrawals. These SACCOs are licensed and regulated by the Sacco Societies Regulatory Authority (SASRA) and offer a range of banking services, including demand deposits and payment services.
Non-Deposit Taking SACCOs
Non-deposit taking SACCOs mobilize savings from members, strictly utilizing these savings as collateral for credit facilities. Unlike deposit-taking SACCOs, members cannot withdraw their deposits and can only receive refunds upon exiting the SACCO. These SACCOs do not offer front-office services for deposit or withdrawal transactions.
What is the differences between Deposit-Taking SACCO and Non-Deposit Taking SACCO
The primary distinction between deposit-taking and non-deposit-taking SACCOs lies in their treatment of member deposits. Deposit-taking SACCOs operate similarly to banks, allowing members to open savings accounts and withdraw funds as needed. On the other hand, non-deposit-taking SACCOs require members to purchase shares and save money, which cannot be withdrawn until they exit the SACCO. Access to funds in non-deposit-taking SACCOs is primarily through loans.
Regulation and Oversight
Deposit-taking SACCOs fall under the regulatory purview of SASRA, ensuring compliance with industry standards and safeguarding member interests. Non-deposit-taking SACCOs are supervised by the Department of Co-operatives Development. While deposit-taking SACCOs are subject to stringent regulatory requirements, non-deposit-taking SACCOs operate under cooperative society regulations.
Choosing the Right SACCO
When selecting a SACCO, it’s crucial to understand the distinction between deposit-taking and non-deposit-taking entities. Ensure that deposit-taking SACCOs are licensed by SASRA to guarantee the safety of your funds. Exercise caution to avoid unlicensed deposit-taking schemes or pyramid schemes promising unrealistic returns. Deposit-taking SACCOs have demonstrated significant growth, contributing positively to the economy and benefiting members through dividends and financial stability.