Principal Secretary for State Department for Cooperatives, Ali Ismail. [ photo/industrialization.go.ke]
Savings and Credit Cooperative Organisations will now be able to fully access the credits information sharing framework from next year as a plan to weed out the loan defaulters and reduce over reliance on loan guarantors.
According to the Principal Secretary for State Department for Cooperatives, Ali Ismail, the ministry is working closely with CBK, Sacco Societies Regulatory Authority and CRB to ensure that Saccos fully access the borrowers information by next year.
‘’CIS will enable saccos to limit their loan portfolio risk and ease the burden on loan guarantees who end up losing their deposits when a member defaults. It will minimize conflicts and improve credit effectiveness in the industry,’’ quoted Ali in an interview with The Star.This will be a good news to Saccos considering that most of Saccos have been blacklisting the defaulters through forwarding of their names to CRB and thus could not be able access bureau data to gauge borrowers trust forcing them to accompany guarantors.
The high number of guarantors in loan lending has led to sharp rise in loan portfolio risk to 5.23 per cent way beyond the country’s recommended maximum of 3 per cent and 0.23 per cent above the Worlds Council of Credit Unions (WOCCO).
According to a Sacco Supervision Report compiled in 2016 and released this year September by SaSRA , the loan to deposit ratio remained unchanged at 108 per cent above 70-80 per cent recommended by WOCCO indicating that members are borrowing more than depositing.
The latest plans comes days after the ministry of Industry, Trade and Cooperatives launched an online platform dubbed Cooperative Management Information System (CMIS) on Tuesday to ensure quick delivery of services to cooperative institutions.
CMIS will enable online registration of societies, , renewals, name searches, filing of audited accounts and wealth declaration forms.