Kenya has one of the deepest savings and credit cooperative sectors in Africa, with millions of members relying on SACCOs for savings, credit, and increasingly, mobile and digital banking services. Operating a SACCO that takes deposits, or even one that mobilises significant member capital without taking deposits, now requires a licence or authorisation from the Sacco Societies Regulatory Authority. This guide explains who needs SASRA approval, the licensing process, and the ongoing compliance obligations that follow.

What Is SASRA and Why It Regulates SACCOs

The Sacco Societies Regulatory Authority, commonly known as SASRA, was established under the Sacco Societies Act No. 14 of 2008 and became operational following the gazettement of the Sacco Societies (Deposit-Taking SACCO Business) Regulations in 2010. Its mandate is to license, supervise, and regulate deposit-taking SACCOs, and more recently, certain categories of non-deposit-taking SACCOs as well. The Authority’s core objective is financial stability and member protection in a sector where, unusually, the same person is simultaneously an owner, depositor, and borrower of the institution.

Two Categories of Regulated SACCOs

Deposit-Taking SACCOs (DT-SACCOs) operate Front Office Service Activities, commonly called FOSA, allowing members to hold accounts, make deposits and withdrawals, and access banking-style services. Any SACCO offering FOSA services must hold a deposit-taking licence from SASRA before commencing that business, under section 24 of the Sacco Societies Act.

Non-Deposit-Taking SACCOs traditionally operated Back Office Service Activities, or BOSA, where member savings are not directly withdrawable except through loan disbursement or exit from the SACCO. Until 2020, these SACCOs fell outside SASRA’s direct licensing regime. The Sacco Societies (Non-Deposit-Taking Business) Regulations, 2020 changed this for a defined category: any non-deposit-taking SACCO holding member deposits of KES 100 million or more, any SACCO mobilising membership and share capital through digital or electronic payment platforms, popularly known as virtual or digital SACCOs, and any SACCO recruiting members or capital from persons ordinarily resident outside Kenya, must now obtain written authorisation from SASRA before continuing that specified business.

Licensing Requirements for Deposit-Taking SACCOs

A SACCO intending to conduct deposit-taking business must apply in writing to SASRA in the prescribed form, accompanied by:

• Evidence that the SACCO meets the minimum capital requirements set out in the Second Schedule to the Regulations
• Information on the location of its head office and any branches
• A detailed four-year business plan and feasibility study, including projected financial statements
• A completed fit and proper test for proposed directors and senior management, assessing their moral and professional suitability
• The proposed name of the Chief Executive Officer
• Audited financial statements for the preceding three years, where applicable

SASRA estimates that a fully compliant application typically takes around four months to process. Once granted, the deposit-taking licence must be renewed annually, with renewal applications typically due by 30 September each year ahead of the licence year running from 1 January to 31 December.

Minimum Capital and Ongoing Prudential Requirements

DT-SACCOs are required to maintain a minimum core capital, commonly cited at KES 10 million, evidenced through audited financial statements or verified bank statements. Beyond the initial capital threshold, SASRA imposes ongoing prudential ratios that a licensed DT-SACCO must continuously satisfy:

• Capital adequacy: core capital must be maintained at no less than 10 percent of total assets, and at least 8 percent of total deposits
• Institutional capital adequacy: a separate ratio requiring institutional capital, meaning core capital excluding members’ share capital, of no less than 8 percent of total assets
• Liquidity: liquid assets must be maintained at a minimum of 15 percent of savings deposits
• Loan portfolio quality: non-performing loans should not exceed 5 percent of the total loan book
• Statutory reserve: an external reserve of at least 2.5 percent of gross assets must be maintained

Failure to maintain these ratios can trigger regulatory intervention, restrictions on operations, or in serious cases, revocation of the licence.

Authorisation Process for Specified Non-Deposit-Taking SACCOs

Where a non-deposit-taking SACCO falls into one of the three specified categories described above, the authorisation application must include a fit and proper test for the board, supervisory committee, and chief executive officer, a certified extract of the general meeting resolution authorising the specified business, audited financial statements for the preceding three years where applicable, evidence of adequate capital, and a non-refundable application fee of KES 3,000. SASRA then conducts an onsite inspection to confirm the SACCO has appropriate institutional infrastructure, a functioning management information system, and adequate governance and risk management structures before granting authorisation.

Governance Requirements

Both categories of regulated SACCO are subject to governance standards under the Sacco Societies Act. A board of between five and nine directors is elected by the Annual General Meeting, with directors limited to a maximum of three consecutive three-year terms. A supervisory committee of three to five members is responsible for auditing the board’s conduct and reporting directly to the membership, providing an internal check separate from external audit. Management is led by a Chief Executive Officer who must also satisfy SASRA’s fit and proper requirements.

Reporting and Compliance Obligations

Licensed and authorised SACCOs face continuing reporting obligations to SASRA, including quarterly returns covering the statement of comprehensive income, statement of financial position, and other disclosures, due within fifteen days of the end of each quarter. Annual audited financial statements must also be submitted. SACCOs are additionally expected to comply with anti-money laundering obligations, data protection requirements under the Data Protection Act 2019, and, where they offer payment-related services, applicable reporting to the Central Bank of Kenya.

A SACCO that ceases to meet authorisation requirements, or fails to apply for timely renewal, faces automatic revocation of its licence or authorisation, after which it is prohibited from continuing to undertake regulated SACCO business. Operating without the required licence or authorisation exposes the SACCO and its officers to regulatory and potentially criminal liability.

Why This Matters for Growing SACCOs

A significant number of SACCOs that historically operated informally as BOSA-only institutions are now finding themselves within SASRA’s authorisation net purely because they have grown past the KES 100 million deposit threshold, or because they have adopted mobile and digital platforms for member mobilisation. Boards and management teams should assess, on an ongoing basis, whether recent growth or a digital transformation initiative has brought their SACCO within scope of the 2020 Regulations, since operating a specified non-deposit-taking business without authorisation is a compliance failure that can attract enforcement action.

Consequences of Operating Without SASRA Approval

Carrying on deposit-taking business, or a specified non-deposit-taking business, without the required SASRA licence or authorisation is a breach of the Sacco Societies Act with serious consequences. SASRA has previously issued public notices flagging cooperative organisations operating without valid licences, and has the power to direct an unlicensed SACCO to cease accepting deposits or new members immediately. Officers of a SACCO found to be operating outside its authorised scope can face personal liability in addition to the regulatory consequences facing the institution itself. For SACCOs undergoing rapid growth, particularly those crossing the KES 100 million deposit threshold without realising the regulatory implications, an internal compliance review before SASRA initiates one is the more prudent path.

Interaction With Other Financial Regulators

SACCOs increasingly intersect with other parts of Kenya’s financial regulatory architecture as their product offerings expand. A SACCO that begins offering payment services, mobile wallet integration, or agency banking arrangements may also trigger obligations under the foreign exchange and Central Bank of Kenya framework applicable to other regulated financial institutions, and should review its compliance position alongside its SASRA obligations rather than in isolation. Similarly, SACCOs that extend credit facilities should be alert to how their practices compare with those of licensed microfinance institutions, since overlapping regulatory expectations on responsible lending and disclosure are increasingly common across Kenya’s financial services sector.

How We Can Help

Clay & Associates Advocates advises SACCOs, cooperative societies, and their boards on licensing applications, governance structuring, regulatory compliance, and responses to SASRA enforcement action. If your SACCO is approaching the deposit-taking threshold, exploring a digital mobilisation strategy, or needs support with an annual licence renewal, our regulatory and compliance team can guide the process from application through to ongoing supervision.

For official licensing guidance and current requirements, see the Sacco Societies Regulatory Authority’s licensing and authorisation page, and the Sacco Societies (Non-Deposit-Taking Business) Regulations, 2020 on Kenya Law.