New Bill proposes deposit guarantee, liquidity regulation in SACCOs
The proposed changes, introduced through the Sacco Societies (Amendment) Bill, 2025 by Majority Leader Kimani Ichung’wah, aim to offer financial protection similar to what commercial bank depositors already enjoy under the Kenya Deposit Insurance Corporation.
Kenyans saving through SACCOs could soon benefit from compensation in the event their institution collapses, if Parliament passes new amendments seeking to create a Deposit Guarantee Fund to protect member savings and regulate liquidity management in the sector.
The proposed changes, introduced by Majority Leader Kimani Ichung'wah through the Sacco Societies (Amendment) Bill, 2025, aim to offer financial protection similar to that which commercial bank depositors already enjoy under the Kenya Deposit Insurance Corporation.
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According to the Bill, members will be allowed to file claims with the Deposit Guarantee Fund if their SACCO’s licence is revoked.
“A member of a sacco society may, upon the sacco society’s licence or authorisation being revoked, lodge a claim with the Deposit Guarantee Fund, in such form and within such time as the Deposit Guarantee Fund may determine,” the proposed law states.
This would mark a major shift in the regulation of the sacco sector, which currently holds more than Sh1.3 trillion in member deposits, none of which is insured under the current legal framework.
Unlike commercial banks, where depositors are guaranteed up to Sh500,000 by KDIC in case of failure, SACCO members have long operated without any such safety net.
The proposed Fund would now serve as a financial cushion to compensate members if their SACCO is unable to meet its obligations.
The change is meant to enhance confidence and stability in the Sacco movement, which plays a critical role in Kenya’s financial system.
The Bill also proposes to bring secondary cooperatives, made up of primary saccos, involved in pooling funds for investment and lending under the full regulatory authority of the Sacco Societies Regulatory Authority (SASRA).
“The Authority shall have power to determine capital adequacy standards and requirements for each secondary cooperative society conducting central liquidity and shared services business, and prescribe minimum liquidity requirements and permissible investments,” the Bill reads.
This move targets risks that surfaced in early 2025 when 201 out of 355 SASRA-regulated saccos were exposed to the troubled Kenya Union of Savings and Credit Cooperatives (KUSCCO), which was holding Sh14.6 billion of their funds.
KUSCCO faced a liquidity crisis worsened by internal fraud, as revealed by a forensic audit conducted by PwC.
The government now wants to prevent a repeat of that crisis by tightening control over the way funds are pooled and managed at the secondary level.
The Bill further proposes that secondary saccos engaging in central liquidity and shared services must open liquidity reserve accounts for each member sacco, ensuring clear and traceable fund management.
“The principal object of this Bill is to amend the Sacco Societies Act, Cap. 490B, to provide for the establishment of secondary sacco societies and regulate the conduct of central liquidity and shared services business,” the Bill adds.
If approved, the changes will give Sasra authority to oversee liquidity reserves and investments of secondary cooperatives, introduce stronger governance standards, and enhance depositor protection.
The reforms are intended to plug regulatory loopholes, restore trust in the sacco system, and protect the financial interests of millions of Kenyans relying on saccos for savings and credit access.
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