Savings and Credit Cooperative Organizations will from next year have full access to the credit information sharing framework, making it easy to weed out loan defaulters.
Principal Secretary, State Department for Cooperatives, Ali Ismail, told the Star that the ministry is working with the Sacco Societies Regulatory Authority, CRB and CBK to ensure that SACCOs get access to the system by September next year.
‘’CIS will enable SACCOs to limit their loan portfolio risk and ease the burden on loan guaranteers who end up losing their deposits when a member defaults. It will minimize conflicts and improve credit effectiveness in the industry,’’ said Ali.
Commissioner for Co-operative Development in the State Department for Co-operatives Mary Mungai said that negotiations are at an advanced stage to ensure that full credit information sharing is implemented next year.
This is good news to an industry that faces a high loan portfolio risk due to lack of members’ credit history. Currently, some SACCOs can only blacklist defaulters by forwarding information to the Credit Reference Bureaus, but can not access the bureau data to gauge borrowers.
This has forced them to bank on member’s trust and loan guarantors to issue loans, leading to high loan portfolio risk that currently stands at 5.23 per cent above the country’s recommended maximum of three per cent and 0.23 per cent above the World Council of Credit Unions (WOCCU).
According to the 2016 Sacco Supervision Report released by SASRA in September this year, the number of loan ratio to deposits remained unchanged at 108 per cent above the 70-80 per cent recommended by WOCCU, an indication that members are borrowing more than their deposits.
The ministry of Industry, Trade and Cooperatives last Tuesday launched an online information system that will enable SACCOs to access core services that it provides.
Dubbed Cooperative Management Information System (CMIS), the delivery system is expected to enhance the ministry’s capacity to deliver its services to cooperative institutions besides monitoring their performance.
The CMIS is fully automated and when fully operational will deliver services such as applying for registration of societies, renewals, name searches, filing of audited accounts and wealth declaration forms.
Speaking while officiating the launch, Ministry of Industry, Trade and Cooperatives Cabinet Secretary Aden Mohamed said that the system will enhance efficiency and accountability in the sector.
Source: https://www.the-star.co.ke/news/2017/11/20/saccos-to-blacklist-defaulters-from-september-next-year_c1670935
