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Loan Policy

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LOAN POLICY FOR UTATU SACCO SOCIETY LIMITED

Utatu Savings and Credit Co-operative Society Ltd was registered with the Ministry of Co-operative Societies on 25th March 2022 under CS No 26702 with the main objective of affording its members an opportunity to accumulate their savings/deposits, thereby creating a source of loanable funds.

Objective

This loan policy as a whole is designed to conform with and supplement the by-laws of the society with a view to:-

  • Ensure that the society does not get into difficulties through approving loans in excess of funds available.

  • Ensuring fairness in Loan granting.

  • Facilitating Loan recoveries.

  • Minimizing Loan defaulting.

Lending Requirements


  • All loans shall be restricted to members only and shall be approved by the credit sub-committee.

  • No member of the loan approving committee shall be present when his/her loan is being considered.

  • For a member to be eligible for a loan, he/she must have been an active member for a period of not less than six months.

  • A member must have contributed not less than minimum shares of Kshs 5,000 and consistent monthly deposits for the last 6 months

  • A member who withdraws and rejoins later shall be treated as a new member for the purpose of this loan policy.

  • If a member clears normal loan before expiry of the repayment period, he/she will qualify for another loan as per the loan register.

  • A member applying for a loan should pledge his/her shares/deposits, guarantors shares/deposits and securities approved by the General meeting.

  • Loan refinancing shall only be considered on very special cases and subject to availability of excess funds and ability to pay.

  • Each loan must be covered by an insurance scheme approved by members in a General meeting.

  • Here is the text with the numbers or letters removed from each sentence:

  • Employees of the Sacco are eligible for membership but not eligible to become committee or sub-committee in the society.

  • A member will be required to continue remitting monthly contribution alongside loan repayment.

  • Members must attach a copy of proof of income including a recent bank statement or other proof of ability to repay.

  • No guarantor will be allowed to resign from the Society unless he/she finds another member to take his/her place as guarantor.

  • No member will be a guarantor for more than the value of their share deposit.

Loan Processing

(a) All loan applications shall be made on the prescribed loan application forms issued to the applicants at Kshs 100 fee which must be fully completed and shall set out:


  • The amount applied for,

  • The purpose of the loan

  • Terms of repayment

  • Types of security provided

(b) Normal loan application forms shall be forwarded to the office latest by 5th day of each month


(c) On receipt of the loan, a member will be required to acknowledge receipt by signing the loan register.

Loan Limitation

(a) The maximum amount of loan granted to a member shall not exceed two times a members deposits but subject to a maximum of 5% of the society’s total share capital and reserves (Ref: Society By-law).


(b) The society shall maintain cash reserve in a reserve account of not less than 20% of the surplus realized annually.

Loan Policy document

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