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The main objective is to Lend out loans to
members at a reasonable rate of interest as set
out in the credit policy
The second objective is to ensure that the loans
are recovered as soon as possible so that funds
become available for further lending.
In carrying out the two main objectives, we
strive to give the best services to members in
the shortest possible period without
discrimination or favor.
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It is cheaper compared to bank loan less
interest for members who clear loans before
the agreed period.
Deductions are constant; not adjusted with
inflation rate.
Interest is paid back to the member in forms of
dividends.
There is personal touch since the member is
part of the Sacco.
No hidden charges.
Banks have claimed to charge the same
interest as Sacco's at 12%. However, the
effective rate for Sacco's is 6.6 percent per
annum considering it is 1% on reducing
balance method.
Example: A loan of Kshs:100,000 payable in
12 months,
The monthly installment is
Kshs: 8,885
Total repayment (8885 x 12) KShs:106,620
Less loan amount
Kshs: 6,620
Therefore the % p.a interest is 6.62%
(6,620/100,000)%
The Sacco shall ask for such security as it may
consider necessary:
 The deposits of a member are taken as
security, unless the loan applied for is equal to
or less than a member’s deposits then it must
be secured by guarantors.
 The total free deposits of the borrower and
guarantors’ commitment must be equal to or
more than the loan applied for.
 A member may be granted a loan without
guarantor(s) if it does not exceed 95% of
his/her deposits and has not guaranteed any
loan.
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All guarantors must be members of the
society with good standing and acceptable by
the Credit Committee.
No member of the Board of Directors or any
Board committee shall act as an endorser or
guarantor for a borrower from the society.
A borrower or a guarantor can apply to the
Credit Committee for change of guarantors.
We are in process of integrating our system
to enable the system to send SMS to
guarantors to confirm if they have guaranteed
the loans.
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Its is important to take keen interest when
guaranteeing a fellow member by noting the
amount of loan applied for and following up to
ensure that what you guaranteed is the amount
of loan received.
Guarantors should indicate your full names and
the amount of shares guaranteed.
Loan applicants should countersign any
changes made in the loan form and inform
their guarantors where the loan amount has
increased.
Statements currently show loans guaranteed, it
is easier to monitor the these loan reductions.
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Be proactive in approaching the Sacco in
case of any anticipated problems regarding
your remittances.
When placing standing orders, please
indicate your member number in addition
to your name and send a copy to our office.
Please indicate your member number when
depositing cash and cheques directly to our
account and ensure the slip is forwarded to
the Sacco office for receipting.
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A Loan is in default when it is 3 consecutive
months overdue.
Any loan defaulted for more than three
months, will be recovered instantly, first from
the individual member’s shares, then from
the guarantors unless the guarantors request
to repay the loan through check off.
A defaulter does not qualify for dividends.
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A member is declared dormant if he/she does
not contribute the minimum Kshs:2,000 for
six months in a given year.
Dormant members’ shares do not qualify for
dividends.
They also lose interests on their deposits
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A member can avoid dormancy by making
regular contributions through a standing
order(individual members), ensuring timely
remittances by their organizations and
keeping track of contributions by contacting
Kimisitu offices.
Statements are sent on a quarterly basis.
Plans are at an advanced stage to avail
members statements online.
The 2012 dividends were calculated as
illustrated below.
Shares
Shares as at 31st Dec
2012
Dividends thereof
at30%
less withholding tax at
5%
Net Capitalized
Dividend
Kshs
2,000.00
600.00
(30.00)
570.00
 Interest on deposit is prorated as per the
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number of months the deposits have been
in the Sacco.
This is to discourage members from taking
advantage of making lump sum payments
e.g. depositing Kshs.100,000 in November
and expecting to receive a full year’s
interest.
INTEREST ON DEPOSITS COMPUTATION
Month
Amount(a)
n/12
Weighted Ratio(b)
Weighted deposits(axb)
185,000.00
1.0000 (12/12)
185,000.00
Jan-12contribution
5,000.00
0.9167(11/12)
4,583.33
Feb-12contribution
5,000.00
0.8333 (10/12)
4,166.67
Mar-12contribution
5,000.00
0.7500 (9/12)
3,750.00
Apr-12contribution
5,000.00
0.6667 (8/12)
3,333.33
May-12contribution
20,000.00
0.5833 (7/12)
11,666.67
Jun-12contribution
5,000.00
0.5000 (6/12)
2,500.00
Jul-12contribution
5,000.00
0.4167 (5/12)
2,083.33
Aug-12contribution
50,000.00
0.3333 (4/12)
16,666.67
Sep-12contribution
5,000.00
0.2500 (3/12)
1,250.00
Oct-12contribution
5,000.00
0.1667 (2/12)
833.33
Nov-12contribution
105,000
0.0833 (1/12)
8,746.5
Dec-12contribution
Total Current deposits(Dec
2011)
5,000.00
Bal b/f as at Ist Jan 2012
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305,000.00
Total Weighted deposits
244,580.83
Gross interest @10.3%
25,191.82
Withholding tax @ 5%
(1,259.59)
Net Interest Payable
Total Payable to Member
23,932.23
23,932.23
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"When wealth is lost, nothing is lost; when
health is lost, something is lost; when
character is lost, all is lost."
- Billy Graham
 The most important thing for a young man is
to establish a credit.. a reputation, character.
- John D Rockefeller