What happens for a SACCO account to be declared dormant
A Savings and Credit Cooperative Organization (SACCO) account is designed to help members save regularly and access credit facilities. However, if an account is not actively used over a certain period, it may be classified as dormant. This classification affects how the account is managed, and in some cases, it may limit access until the account is reactivated. Below we explore what happens for a SACCO account to be declared dormant.
Definition and Timeline of Dormancy
A SACCO account is typically considered dormant when there has been no deposit, withdrawal, loan repayment, or any other form of transaction over a specified period. While the exact duration varies depending on the SACCO’s internal policies, most SACCOs in Kenya treat an account as dormant after 6 to 12 months of inactivity. Once this threshold is reached, the SACCO flags the account for closer monitoring and may initiate steps to protect the funds from being misused or lost.
Process of Declaring an Account Dormant
When the dormancy period lapses without any activity, the SACCO issues a formal notice to the account holder. This is often done through SMS, email, or postal communication, informing the member of the pending dormancy status. If no action is taken by the member within the given timeframe after the notice, the account is then formally classified as dormant.
At this point, the SACCO may limit access to the account. This means the member may not be able to make withdrawals, request loans, or perform any financial operations unless the account is reactivated. In some SACCOs, dormant accounts are transferred to a different ledger to separate them from active accounts and may attract special service charges.
Implications of Dormancy
Dormancy affects a member’s eligibility to enjoy various SACCO benefits. A dormant account means the member is no longer actively participating in the affairs of the cooperative. This status may lead to forfeiture of voting rights, loss of dividends, or delayed loan approvals. In addition, SACCOs may begin deducting dormancy fees or maintenance charges from the remaining balance, gradually reducing the savings held in the account.
If the account remains dormant for several years—usually five to seven—the funds may be classified as unclaimed financial assets. At this point, the SACCO is required by law to surrender the money to the Unclaimed Financial Assets Authority (UFAA) in Kenya. The member can still reclaim these funds, but only through a formal claim process administered by UFAA.
How to Prevent Dormancy
To avoid dormancy, members should ensure regular interaction with their SACCO accounts. This can be through saving small amounts consistently, servicing loans, or participating in other financial activities such as FOSA (Front Office Services Activity) transactions. It is also important to update contact details to ensure you receive all communications regarding account status and any impending dormancy action.
Reactivating a Dormant Account
If your SACCO account has already been declared dormant, reactivation is usually possible. The SACCO will require the member to fill out a reactivation form, provide updated identification documents, and possibly make a small deposit to demonstrate renewed activity. Some SACCOs may also request a revalidation of membership details.
Author: Andrew Walyaula
Andrew Walyaula is a seasoned multimedia journalist. satrendmagazine@gmail.com
