The Members of Parliament urged the regulator to adopt a more equitable deposit insurance model that offers better protection to depositors.
Under the framework, compensation paid from the Deposit Insurance Fund would be based on a member’s protected deposit, calculated as the total credit balance across all their SACCO accounts minus any outstanding loans, liabilities, or loan guarantee obligations owed to the SACCO.
Once the obligations have been settled, members of insolvent SACCOs will then be eligible to lodge claims with SASRA for payment of their protected deposits from the fund.
If the proposed payout limit is increased, Kenyans would be entitled to greater compensation, providing stronger protection for their savings should their SACCO collapse.
In addition to the payout, the Bill is pushing for stronger supervision and oversight to improve the safety of members’ deposits and the sustainability of SACCOs.
SASRA Chief Executive Officer David Sandagi said the proposed reforms, including the establishment of a deposit insurance fund, would boost public confidence in regulated SACCOs while making supervision more efficient.
Sandagi added that the Bill’s promotion of shared technology and digital platforms would address technical disparities faced by smaller SACCOs, helping them reduce operational costs and improve compliance.
Further, the legislators cautioned SASRA against introducing excessive administrative requirements that could complicate SACCO operations, calling on the authority to ensure the proposed law is flexible enough to respond to the changing needs of the cooperative sector.
