Training on Regulatory Compliance for Deposit-Taking SACCOs

Module 1: Regulatory Landscape for Deposit-Taking SACCOs

• SACCO Societies Act (Cap 490) and SACCO Societies (Deposit-Taking) Regulations

• Roles of SASRA, Co-operative Commissioner, and external auditors

• Licensing requirements: minimum core capital, fit and proper criteria for management

• Case Study: Review a SASRA breach letter citing non-compliance with minimum core capital – draft a remedial action plan with timelines

Module 2: Capital Adequacy & Liquidity Compliance

• Core capital vs. total capital: definitions and regulatory floors (e.g., KSh 50M minimum core capital)

• Capital adequacy ratio (CAR) – Tier 1 and Tier 2 capital components

• Liquidity ratio requirements (minimum 15% of member deposits) and stress testing

• Hands-on Exercise: Calculate core capital, total capital, CAR, and liquidity ratio from a DT-SACCO balance sheet – determine if compliant and quantify any shortfall

Module 3: Asset Quality & Loan Loss Provisioning

• Classification of loans: performing, watch, substandard, doubtful, loss

• Minimum provisioning requirements by loan class (e.g., 100% for loss category)

• Related party lending limits and disclosure requirements

• Case Study: Analyze a loan portfolio of KSh 200M – classify 20 sample loans using SASRA criteria, calculate required provisions, and identify related party excesses

Module 4: Statutory Returns, AML & Governance Compliance

• Monthly, quarterly, and annual returns to SASRA (Form 1–12) – timelines and common errors

• Anti-Money Laundering (AML) obligations: member due diligence, beneficial ownership, suspicious transaction reporting (STRs)

• Governance requirements: board composition, term limits, supervisory committee independence

• Hands-on Exercise: Complete a simplified SASRA quarterly return template from trial balance data – identify three AML red flags in member profiles

Module 5: SASRA Inspections, Enforcement & Compliance Action Plans

• Types of inspections: off-site surveillance, on-site targeted, on-site comprehensive

• Common SASRA inspection findings: undercapitalization, high NPLs, inaccurate returns, governance breaches

• Enforcement actions: directives, penalty fees, license suspension or revocation

• Hands-on Exercise: Review a mock SASRA inspection report with 10 findings – prioritize by risk, assign owners, draft a 90-day compliance action plan for board approval