A majority of deposit-taking Saccos in Kenya are experiencing financial instability due to failure by state agencies and private companies to remit statutory deductions on time.

As the government streamlines savings and credit co-operative societies that are reeling under the weight of mismanagement, fraud and bad loans, failure by employers to remit deductions is increasingly becoming a big threat to the survival of many saccos.

To tackle this, the Sacco Society Regulatory Authority (Sasra) is developing legal and institutional proposals to protect saccos from such employers.

UNREMITTED DEDUCTIONS
Sasra statistics show that by end of last year, employers in the public and private sector owed deposit taking saccos $26.7 million in unremitted deductions.

The deductions were in the form of either loan recovery or non-withdrawable deposit accounts, popularly known as back office service activities.

A majority of deposit-taking Saccos in Kenya are experiencing financial instability due to failure by state agencies and private companies to remit statutory deductions on time.

As the government streamlines savings and credit co-operative societies that are reeling under the weight of mismanagement, fraud and bad loans, failure by employers to remit deductions is increasingly becoming a big threat to the survival of many saccos.

To tackle this, the Sacco Society Regulatory Authority (Sasra) is developing legal and institutional proposals to protect saccos from such employers.

UNREMITTED DEDUCTIONS
Sasra statistics show that by end of last year, employers in the public and private sector owed deposit taking saccos $26.7 million in unremitted deductions.

The deductions were in the form of either loan recovery or non-withdrawable deposit accounts, poMr Mwaka says Sasra is in the process of amending the legal framework to act against employers who fail to remit statutory deductions by taking advantage of   weak laws incapable of deterring defaulters.

“The authority is developing proposals to amend the existing legal framework which will deter perennial defaulters and ease the procedures for recovering any defaulted remittances,” he said.

The push to ensure employers remit deductions come when the Sacco sector in Kenya is grappling with a confidence crisis due to mismanagement and fraud, a problem that has seen members lose billions of saving.

Sasra will come up with new market conduct regulations to tame malpractices like inflated charges, delays in reimbursement of deposits and “reckless” lending.

Source: www.theeastafrican.co.ke

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