Savings & Lending Policy

NAMILYANGO COLLEGE OLD BOYS ASSOCIATION SAVINGS AND CREDIT

COOPERATIVE
(NACOBA SACCO)
SAVINGS AND LENDING POLICY
VOLUME 1
JANUARY 2015
TABLE OF CONTENTS

1. SAVINGS POLICY. 4

1.1.       Definition of Terms. 4

1.2.       Introduction. 5
1.3.       Legislation. 6
1.4.       Vision of NACOBA SACCO.. 6
1.5.       Mission of NACOBA SACCO.. 7
1.6.       Savings slogan. 7
1.7.       Savings objectives. 7
1.8.       Tangible benefits from saving. 7
1.9.       Savings focus. 8
1.10.     Saving mobilization and creation of saving products. 8
1.11.     Purpose of this saving policy. 10
1.12.     Saving procedures. 11
1.13.     Saving products. 13
1.14.     Interest payments. 17
1.15.     Modes of payment. 19
1.16.     Operational fees. 20
1.17.     Withdrawals, refunds and inactive accounts. 21
1.18.     Growth and management of mobilised funds. 23
1.19.     Monitoring and management of savings and members. 24
1.20.     Savings internal controls. 26
1.21.     Implementation, interpretation and savings policy review.. 27

2. LOANS AND LENDING POLICY. 29

2.1.       Introduction. 29
2.2.       Lending requirements. 31
2.3.       Loan approval 34
2.4.       Loan appraisal and analysis. 37
2.5.       Appeals. 39
2.6.       Loans disbursement. 39
2.7.       Loans contract. 40
2.8.       Loan monitoring and loan performance. 40
2.9.       Loan performance standards. 41
2.10.     Repayment. 41
2.11.     Guarantee. 43
2.12.     Defaulters and withdrawals. 44
2.13.     Loans management and reporting. 46
2.14.     Loan collection and legal systems. 47
2.15.     Legal procedure. 48
2.16.     Loans documentation. 48

3. Adoption.. 50

3.1.       Adoption. 50
3.2.       Witnessed by: 50
3.3.       ANNEX 1-Membership application form.. 51
3.4.       ANNEX 2-Loan application form.. 52
 

1. SAVINGS POLICY
o Definition of Terms

CAPITALIZATION Surplus, shares and reserves retained in the SACCO used to protect the
value of savings
IDLE LIQUIDITY Cash that does not generate any return but used to finance withdrawals
INFLATION Decreasing the purchasing power/value of the Uganda Shilling
INTEREST RATE Price on members savings to protect the real value of their savings and
a return for the use of their funds
LIQUDITY RESERVE Proportion of savings held in cash or near cash instruments
NACOBA Namilyango College Old Boys Association
NON-PRODUCTIVE Assets which do not generate income
ASSETS
OBLIGATORY SHARES Non withdrawable risk capital required to obtain membership status and
ownership right in SACCO.
PROFIT Margin or growth premium which is distributed as a return to members
and/or retained as a reserve to accumulate capital for the SACCO
SACCO Savings and Credit Cooperative
SAVINGS Funds paid by members which are subject to a flexible withdrawal and
access and can be used as collateral.
SHARE Capital of the SACCO and an asset to members also defined as risk
protecting capital collected from members in proportion to compulsory
savings
UGX Uganda Shillings
 

 Introduction
o Savings mobilization is one of the main objectives of NACOBA SACCO
purposely to improve the economic and social well-being of members through
wealth creation and accumulation. Therefore, NACOBA SACCO must consider
its members’ savings needs just as carefully as it considers their borrowing needs.
It is therefore crucial to have regular flow of savings from members to efficiently
provide them with financial services.

 The SACCO needs to encourage and oblige its members to develop a saving culture in
order to mobilize sufficient capital resources which can be employed and invested
through various saving and investment products for the benefit of member’s financial
needs.

 To ensure that the process of savings and mobilization takes place, the SACCO will have
to offer absolute safety of members’ savings by protecting their real and nominal value
through clear procedures and guidelines. In this regard it is highly important to have a
savings policy to offer guidance and procedures in the management of funds saved by
members.

 This policy shall be referred to as the Namilyango College Old Boys Association Saving
and Credit Cooperative Savings and Lending Policy (“NACOBA SACCO Savings &
Lending Policy”).
  This policy has been designed taking into consideration best practices used by SACCOS,
possibilities within the NACOBA SACCO Constitution, the Cooperatives Act and a long
term perspective on SACCO operations and business.

 The policy gives insight about NACOBA SACCO’s saving and lending objectives,
purpose, operational systems and the role of members and the Executive in mobilizing
and managing savings.

 Effort has been made to consider practical mobilization policies for savings and loans in
order to motivate and encourage members to contribute funds within their able capacities,
in accordance with laws and regulations that govern SACCOs and the NACOBA SACCO
Constitution.

 It further provides guidance for compulsory, voluntary and discretional savings

mobilization from and among members and facilitates the Executive and management to
mobilise savings, perform efficiently and offer standard services to members.

 Therefore this policy entails realistic and practical saving policies in respect of members’
needs, SACCO investment objectives and the ability to provide a reliable and adequate
source of funds to satisfy members borrowing needs.

 Members must comply with the guidelines contained in this policy and the Executive is
obliged to enforce them without fear, favor or bias and without losing focus of the
SACCO objectives as represented in its mission, vision and Constitution.

 The Executive must ensure and provide wide publicity and visibility of this policy. Every
member and employee of the SACCO must be presented with or provided a hard copy or
soft copy of this policy prior to engaging with the SACCO.

 The following principals have been applied in developing this policy:

 
  Saving resources shall only be mobilized among SACCO members.

 The saving and mobilization structure must consider the cost of the funds and match them
with members’ liquidity needs and the corresponding assets (loans and investments).

 The expiration term of both assets (loans) and liabilities (savings) must be similar or
comparable.

 Products developed should accommodate the diversity, means, abilities and capacities of
NACOBA members.

 Savings mobilization should be premised on a perception of safety, soundness, trust,

responsiveness and modernity.

 Interest rates paid should be competitive to encourage savings without comprising the
solvency of the SACCO.

 Mobilization of savings should integrate innovative approaches and modern information

technology systems to create diverse and dynamic products which motivate members to
save frequently while at the same time reprimanding members for non-compliance.

 Long term savings should be encouraged as a basis for granting loans instead of using
external financing.

 Legislation
o This policy is made in accordance with the provisions of the Cooperative Act and
the SACCO by-Laws (NACOBA SACCO Constitution).

 
  Vision of NACOBA SACCO
o The Vision of NACOBA SACCO from which this policy is developed is to
ensure that it is the SACCO of choice for members’ savings, financial and
investment needs.

 Mission of NACOBA SACCO

o In implementing this policy the SACCO shall be guided by its mission which
focuses on applying appropriate management practices to mobilize financial
resources from NACOBA members, and utilize them efficiently and effectively to
create and accumulate collective and individual wealth for members.
 Savings slogan
o Individually we prosper, collectively we succeed.

 Savings objectives
o Develop sufficient resources and empower members to build and accumulate long
term assets and wealth.

 Provide funds which can be applied to access credit easily and cheaply by members
compared to other financial institutions.

 Meet member’s financial needs without taking undue risks thereby helping them avoid
ruthless money lenders and bureaucratic hurdles from banks.

 Undertake joint investment opportunities which may provide good flow of income to
members and further builds self-confidence, pride and self-reliance in NACOBA.

 Tangible benefits from saving

o Using the savings mobilized various investment and loan products shall be
offered to members at competitive rates, in a timely and convenient manner and
further increase return on member’s funds.

 
  Saving shall combine smaller amounts collected from members so that mutually they can
make significant investment decisions than they would otherwise be able to afford and
execute on an individual basis.

 The SACCO will offer short-term savings in the beginning. As demand rises and the
SACCO grows, the SACCO will offer both medium term and long term savings. Short
and medium term savings shall help members manage uneven cash flows and help
generate a return that will grow the SACCO but also provide a return to all shareholders.
Long term savings shall also help members provide a security fund for retirement.

 Member savings shall reduce the need to borrow, or the cost of borrowing. The loan
interest rates are also expected to be less on savings secured loans.

 Members’ savings shall act as an insurance against illness, school needs, disease,
retirement, sudden income loses, inheritance for their children and spouses and purchase
of durable and investment goods.

 Unlike property or other assets, members’ savings are liquid, that is, the full value is
available almost immediately on demand.

 The savings shall be the primary means of securing funds to make loans and generate
income which shall be used to pay for operating expenses, to invest in new services,
assets and benefits and to increase the SACCO capital.

 Savings focus
o Business orientation and thereby employing available resources effectively and
efficiently for the benefit of members.

 Involve all members in their diverse backgrounds, capacities and abilities.

 Benefits shall be shared individually and collectively.

 

 Financial discipline, prudence and responsibility of all stakeholders to ensure an

operational environment that enhances profitability.

 Saving products should not burden members with paper work and other transaction costs.

 The Executive shall determine, in percentage terms and on an annual basis, the maximum
amount of savings that can be loaned out to members but shall not exceed 85% of the
total savings.

 Members may uphold a moral character and be loyal with their saving products.

 Saving mobilization and creation of saving products

o To make a significant long-term difference in creating individual and collective
wealth, savings must be a habit that is practiced regularly. To get members to
develop this saving habit, NACOBA SACCO’s must convert non-savers into
savers and convert occasional savers into habitual savers.

 In encouraging members to save the Executive and management should offer savings
products that provide members with incentives to deposit and disincentives to withdraw.
In this regard the SACCO will charge a small or no fee for deposits, to encourage
members make regular deposits and a higher fee for withdrawals which should also be
done less frequently and for well-planned uses and real emergencies.

 The saving products will be designed to respond to all members capacity to save in
reasonable amounts, of varied values and as frequently as possible.

 The SACCO shall provide four types of savings services:

 
  Obligatory shares (risk capital) which are required to join the SACCO and obtain
membership.
 Compulsory savings where members shall be forced to save on a regular basis, preferably
on a monthly basis starting with UGX 50,000.
 Voluntary savings which are deposited and withdrawn as members and the Executive
dims fit. These savings can be withdrawn and deposited into compulsory saving accounts.
These accounts are aimed at ensuring regular flow of cash to the SACCO and promote
members participation in their individual capacities. These SACCO may or may not
provide interest on these savings.
 Contract savings (time or fixed deposits) which are long term in nature and are only
required in meeting and supporting identified SACCO business.

 The Executive and management of the SACCO shall promote savings and get the
message out through the following initiatives:

 Personal contacts with NACOBA members through the cross selling of products during
various meetings of NACOBA, on the NACOBA forum and website, at financial
counseling sessions or workshops.

 Printed materials “targeted” towards NACOBA members.

 Use of social media such as WhatsApp, Facebook, Google plus to reach a considerable
number of NACOBA members.

 Presentations and discussions during events and functions organized by NACOBA.

 Use of awards and incentives to members who have carried considerable savings with the
SACCO.

 The SACCO Executive shall consider the following factors when implementing a savings
mobilization programme and corresponding products:
 

 Solid understanding of the target market and market demographics such that the products
designed are those desired by members and excite and entice them to save.

 Functional, positive and progressive image of the SACCO.

 Feeling of security and soundness through efficient and transparent means of

communication.

 Workable and competitive scheduling compatible with the needs of members.

 Sufficient levels of technology that provide protection mechanism for savings mobilized.

 Competitive financial services for savings mobilization that meet the demands of
members including competitive depository rates.

 Affordable, demand driven, profitable, manageable products that enable members to have
convenient access to their money.

 Implementation of diverse short, medium and long range products that are more response
to members’ lives and commercial interests.

 Purpose of this saving policy

o The purpose of this saving policy is to:

 Ensure dedication, commitment and compliance of all members to the saving culture.
 

 Mobilise a solid base of members with the ability to save and to entrust their savings with
the SACCO due to its attractive products and services.

 Ensure all members save within their financial means and avoid concentrating
mobilization efforts among a few members.

 Provide direction, guidelines and mechanisms for savings mobilization and guidance for
creating new products and market niches.

 Protect members’ deposits protection against abuse, misuses, loss in value and/or fraud.
 Make provisions for proper and efficient utilization and administration of savings to
ensure that SACCO and member interests are adequately protected.

 Ensure equitable distribution of funds and encourage liquidity planning to respond to

business and financial needs of the SACCO.

 Enhance effective communication and information flow between the SACCO and its
members.

 Provide a uniform and objective level of understanding and applying saving operations
and to professionally address the saving issues in the SACCO.

 Describe the conditions and requirements for saving and how members can withdrawal
their savings.

 Encourage members to save and buy shares through coherent and objective approaches
and ensure that members do sacrifice and are disciplined in saving with the SACCO.
 

 Establish and formalize the saving products that the SACCO offers to its members and
define the terms and conditions for each saving product.

 Describe the procedures by which the liquidity, pricing and transactions for each product
are managed.

 Ensure there is sufficient liquidity at all times to meet members’ cash and financial needs
and that interest rates are competitive and in line with inflation.

 Saving procedures
o Prior to opening any savings accounts, the individual requesting the account must
be a member of NACOBA SACCO and by default NACOBA. The Executive or
management shall determine if the individual is eligible for membership
according to the SACCO’s bylaws.

 If he is eligible to be a member he shall perform the following duties:

o Complete a saving form. This form is completed only when the first account is
opened and not for every additional account the member opens. The form must
include information relating to the beneficiary of the members’ investment in the
SACCO upon death of a member.

 Submit a passport photo and a copy of a national identification document.

 Pay a non-refundable entrance fee of UGX 10,000 and an initial allocation of five (5)
nominal shares each costing UGX 20,000 for a total of UGX 100,000. The nominal share
does not earn a dividend, or interest, is non-withdrawable and non-refundable as it
becomes part of the SACCO capital. For members who have already deposited funds in
the SACCO prior to coming into effect of this policy, the amount shall be deducted from
their contributions.

 
  Open a regular savings account with a minimum deposit of UGX 50,000 and thereafter
save at least the same minimum amount on a monthly basis for a maximum of UGX
100,000,000.

 Obtain an account number and/or a passbook.

 Where passbooks are applied, deposits shall be accepted to any account without requiring
presentation of the appropriate passbook, as long as the member submits an official
deposit form. When the passbook is presented at a later date, it will be updated. The
account holder will be responsible for any case of error or neglect.

 Replacement of the passbook, ledger or the certificate of deposit, due to loss, destruction
or theft, will be the responsibility of the member. If there is a fee associated with this the
member is responsible for paying the fee prior to receiving the new passbook or
certificate. The new document will show as the initial record the account balance kept by
the SACCO, unless the member has other convincing evidence as to a different balance.

 For each transaction the member should complete a receipt for deposit or withdrawal.
Any time the member receives money back they should sign the payment voucher which
should be in duplicate. One copy stays at the SACCO. The other part is given to the
member.

 If cheques are taken for deposits into member accounts, the account should not be
credited until the cheque has matured.

 Mobile money transfers and direct debits to the SACCO bank account will be credited
following acknowledgment of the transaction by the Treasurer or upon receipt of a
transaction from the bank or mobile money vendor, whichever comes first.

 Members can open more than one saving account. Each additional account that is added
by a member will have the same account number with a different suffix for the different
accounts (for example – #100-1, #100-2, etc.).
 

 The SACCO may charge stationery, deposit, service or withdrawal fees while serving
members to mobilize savings. The fee rates shall be determined annually by the
Executive.

 When a member requests to close a saving account, the Executive or management must
ensure that the funds on the account are not guaranteed to secure a loan, otherwise it may
not be closed.

 Members intending to terminate their membership from the SACCO will do so after a
period of one year or 31 December, whichever comes later. Such members shall have
their savings refunded plus any interest, owed within the period they were members less
any outstanding financial obligations they have with the SACCO. If the NACOBA
SACCO has been operating at a loss, the Executive will negotiate the final payment.

 Saving products
o In operation of savings accounts every member shall contribute on a monthly
basis or at such fixed periods and in such amounts as prescribed in this policy or
as determined by the Executive.

 The SACCO will offer two broad types of saving products, demand savings and
commitment savings.

 Demand savings shall have no interest paid and subject to monthly maintenance fees.
Commitment savings shall bear an interest return on the savings, be used as collateral and
are subject to a minimum balance and withdrawal limits.

 A member shall not be eligible for interest unless he has consistently saved for six
months or paid at least UGX 900,000 within the first nine months of the SACCO
calendar year in an interest bearing account or product.

 
  During the first 6 months of operations the SACCO will offer the following demand
saving product accounts.

 Ordinary (obligatory) Savings Account (Mandatory Share and will become part of the
SACCO Capital) – In order to become a member of the SACCO, and thereafter on an
annual basis, each member must purchase five obligatory shares for the amount of UGX
100,000. This deposit is non-withdrawable or refundable. Upon termination of
membership in the SACCO the member does not receive these funds. These funds cannot
be used to guarantee a loan and shall not be pledged as collateral or security for a loan
granted by the SACCO. These shares are not transferable and do not earn any return.

 Regular Savings Account (Normal Account) – This is a compulsory and primary account
to all members. The characteristics of this account include: easy accessibility of account
by member, minimum amount to open an account, the payment of a competitive interest,
and the funds in this account may be used to secure loans or collateral against borrowings
including guarantying loans for members desiring to borrow but cannot meet all the
financial requirements. To encourage savings, higher interest will be paid on accounts
with larger balances.

 Some key features of this account are:

1. Minimum monthly saving of UGX 50,000

2. Minimum balance of UGX 100,000
3. The minimum balance in order to receive interest is UGX 600,000
4. Unpaid monthly savings attract a charge of UGX 10,000 per month in arrears.
5. A member can pay his savings in advance in any particular month.
6. Interest on savings shall be computed on an annual basis.
7. The maximum allowable savings balance is UGX 100,000,000 or 30% of the total share
capital at the end of the preceding financial year, whichever is higher.
8. Members can withdrawal these funds when leaving the SACCO.
9. A member is not eligible to use these funds as collateral for loans unless he has
consistently saved for three months or has saved 30% of the total amount he desires to
borrow.

 Interest shall be paid on this account based on available earnings and paid at the end of
each financial year. Should there not be sufficient available earnings, the interest paid is
to be reduced but not eliminated for this account.
 
 

 After 6 months after coming into force of this policy and following the approval of the
Executive the SACCO can offer in addition to the above account, the following
additional accounts:

 Special Purpose Savings Account – These accounts are for saving for a specific or
predetermined purpose and are intended to mobilize longer term savings for a fixed
purpose such as school fees, holidays and vacation, tied to a future loan request (such as
purchase of a motor vehicle), or any other special market niche, which will serve the
SACCO membership. This account relates to members who want to save a specific
amount each month and then take out the whole amount at the end of a period of time,
preferably one year. These accounts allow for multiple deposits over time, usually pay a
higher interest than regular savings accounts because the member cannot make any
withdrawals from this account until the specified date. The Executive will determine a
maximum amount that may be deposited in this type of account because the interest rate
is higher. This account may be used to secure a loan. The loan maturity is to coincide
with this account maturity.

 These deposits may be matched against loans and investments with a similar maturity.
Unlike regular savings these accounts have a stated withdrawal date and will most likely
remain in the SACCO until that date.

 Some key features of this account are:

1. Applicant must have a current or ordinary savings account.

2. Deposits can be made as often as possible.
3. Deposits can also be done automatically from the ordinary savings account.
4. Withdrawals from these accounts maybe made at least every after four months.
5. No withdrawals for the first three months
6. Withdrawals are only allowed for a stated purpose and any withdrawals for another
purpose result in forfeiture of interest for the period saved.
7. If the funds are withdrawn prior to that date no interest will be paid on the account.
8. The interest rate on this account is greater for ordinary savings and less than fixed
deposits.
9. Interest is calculated every quarter and payments are made on the first working day of
each quarter.
 10. The minimum amount to open is UGX 100,000 which is also the minimum balance when
the account is being operated.
11. There is no maximum limit but all deposits must be in multiples of UGX 100,000.

1. Interest rate paid is beyond the maximum that the SACCO pays for regular savings, at an
unspecified rate with simple interest computed monthly but the annual rate should be
determined in advance prior to accepting the deposit

1. Withdrawal of any or all the savings prior to maturity shall result in a percentage penalty
for early withdrawal as resolved by the Executive. The penalty may not exceed the
interest rate provided for the savings.

1. Upon the finalization of the terms of the contract, the member may withdraw all or part
of his savings and accrued interest or roll over all or part of the savings and /or accrued
interest under new terms and conditions.

 Certificates of Deposit or Fixed Term Savings – These deposits are for a stated amount
(minimum three months and maximum 60 months), until a stated maturity, for a stated
interest rate. They are intended for net savers who seek to maximize their returns and are
aimed at providing the SACCO with stable funds to finance longer term loans. The
member signs a contract with the SACCO when making this type of deposit in the
SACCO. The longer the maturity of the certificate the higher the interest rate. The
SACCO will offer 6-month and 1-year maturities. Depending on demand, certificates
with maturities ranging from 18 months to 3 years may be offered. These funds may be
used to secure a loan. The loan maturity shall match the deposit maturity.

 In order to be eligible for a current account the individual has to have been a member of
the SACCO for 6 months.

 The interest rate is fixed until maturity. Interest will be paid upon maturity for all
certificates. Interest rates paid for lower investment periods shall be lower than those for
higher investment periods. The maximum rate payable on these deposits shall not exceed
5% per annum for a 3 months deposit, 10% per annum for a 6 months deposit and 20%
per annum for a 12 months deposit.
 

 These funds may be used to match against loans and investments of similar maturity. The
Executive must be careful not to have a disproportionate amount of these accounts in
comparison to regular savings because these accounts are normally the most costly in
terms of interest rate paid.

 The minimum deposit for a certificate of deposit is UGX 1,000,000 and there is no
maximum limit.

 The term shall be of a minimum of 3 months and a maximum of 60 months.

 No withdrawal may be made from this account. If the funds are requested prior to
maturity there will be a penalty or fine equaling:

1. No interest paid for deposits with a 3-month maturity,

2. 3 months interest for deposits with a 6-month maturity, and
3. 6 months interest for deposits with a 12-month maturity on this account that must be paid
prior to withdrawal.

 The SACCO shall issue a contract document for these deposits stipulating the terms and
conditions including, the right to recall the deposit by the SACCO and penalties for
withdrawal of all or part of the deposits before maturity.

 Interest will be negotiated prior to accepting the deposit and shall be paid upon the end of
the term.

 These deposits may be to serve as guarantee for loans but such loans may have to mature
on or before the maturity of the term deposit.

 Interest payments
 o The management of interest rates shall depend on the consideration of any or all
the following elements:
 Inflation rate
 Real interest rates (positive or negative)
 Saving transaction costs
 Savings mobilization volume
 Conditions offered by the market
 Interest rates according to the saving level
 Average weighted interest rates on the savings portfolio
 Set rates on fixed and negotiated deposits
 The cost of the product to the SACCO
 Member behavior. Do the members have the funds in the SACCO because
the interest rate is the highest in the area? How loyal are the members? If
savings interest rates are less than anticipated will they keep their deposits
at the SACCO or will they take their money elsewhere?
 Are there any types of deposits that the officials think would improve the
financial soundness of the SACCO? If so, often special promotions,
increased marketing efforts, and attractive rates are offered.

 The specific policies in determining interest rates include:

o Interest rates should be changed and also reduced if market conditions require it,
without prior public communication by the SACCO.
o Interest rates should be competitive based on prevailing market situations.
o Interest rates should be reviewed and adjusted periodically according to the
patterns maintained by the competition, business volume, savings period and
market trends.
o Interest rates, calculations and capitalization periods are variable and are applied
according to the services offered by the SACCO.
o If the financial market allows, interest rates on deposits should be equal to or
greater than the inflation rate in order to preserve the real value of the deposits.
o Interest rates should be differentiated according to savings amounts.
o Minimum amounts must be established for opening an account and for
determining allocation of interest.
o Real interest rates for different savings ranges should be marketed. Negotiable
interest rates can be offered for a select market niche with a great savings capacity
to maximize the amount of savings.
o Interest capitalization periods for different savings approaches may be applied on
a daily, monthly, quarterly, semi-annual or annual basis.
o The calculation of interest on savings accounts must be based, if applicable, on
the daily balance or on the average savings; the most competitive and impartial
base to benefit the members must be analyzed.
o The calculation of the interest shall be done on 365 calendar days. The interest
calculation must be done until the day prior to the closing of the account.
 o Interest rates on scheduled savings accounts must be greater than those paid on
regular savings accounts.

 Interest rates paid on deposits should always be higher than inflation so that the
members’ savings accounts do not lose value while on deposit with the SACCO.

Account Type                                            Maturity                          Interest Rate

Obligatory Shares                                                          Non-withdrawable                     N/A
 
Regular Savings                                                    None/On demand                                4
(As the balance increases so will the interest rate paid. The highest rate
paid should not be greater than the rate paid on the special purpose
savings account.)
 
Special Purpose Savings                                     As stated depending                           3
on purpose
 
Certificate of Deposit                                                          6 month                                 2
 
12 month                               1
(In the interest rate column, the number 1 signifies the highest rate and number 5 signifies the
account that would be paid the lowest interest rate)
 

 If the SACCO does not have enough net income to pay all or part of the interest owed
then the interest will have to be reduced or eliminated for the savings accounts in the
following priority.

 Term deposits or certificates of deposits – The SACCO has entered into a contract with
the member so all interest on these deposits must be paid at the rate and time stated in the
contract.

 
  Obligatory shares – No interest will be given to members who own obligatory shares.

 Regular savings account – The interest for these accounts is obligatory. Due to available
earnings this interest may have to be reduced but not eliminated.

 Special purpose savings accounts – The interest for these accounts will be paid after
term deposits. These interests are to be handled in the same fashion as those for regular
savings accounts.

 Interest rates on all accounts shall be reviewed annually by the Executive and shall be
applied differently according to the needs of the SACCO and the benefits of members.

 Interest rates shall provide a member with a positive real rate of return, posted on an
annual basis on all accounts with a balance above the required minimum.

 Payment of a dividend is based on how well the SACCO has performed that year, i.e.
how much money it has made or lost. The dividends shall be worked out once all debts of
the have been paid, an amount is put in the reserve account and any taxes have been paid.
It is important to note that a dividend is not guaranteed.

 Save for fixed deposits and special purpose savings accounts, the interest period shall be
annual and paid on the average minimum savings balance on all compulsory saving
accounts.

 Modes of payment
o The following payment methods shall be accepted when making saving deposits:
 Direct cash payment to Treasurer.
 Cash or cheque deposit to SACCO account.
 Electronic funds transfer, direct debit or standing instruction from
member’s account to SACCO account.
 Use of mobile money services to mobile money numbers designated by
the SACCO Executive.
 

 Deposits may be accepted in any account without the need of presenting the passbook or
ledger if applicable, pointing out at the same time that the passbook or ledger will be
updated subsequently.

 The Treasurer can suspend the use of passbooks or written ledgers in replacement of
electronic ledgers based on standard accounting or computer software. Such ledgers may
be aggregated for all members or for each individual member.

 Replacement of a savings passbook or share certificates must be the responsibility of the

member; the new document will present the final recording of the balances kept by the
SACCO, if it turns out that the affected member has no other evidence to the contrary.

 Cheque shall only be credited to maturity. Any charges or cheques whether cleared or not
shall be charged to the member’s account.

 Deposits on a savings account will be verified by notes written by the SACCO in the
passbook or by a SACCO receipt.

 All payments shall be acknowledged by a receipt.

 The Treasurer will be obliged to upload a detailed statement of savings and deposits for
all members, every quarter, on an appropriate social media or SACCO forum.

 A member can request for his statement of financial position by sms, e-mail, and
appropriate social media or by written correspondence to the Treasurer and such
information shall be provided within 72 hours following receipt of the request by the
Treasurer.

 
  In case of term deposits or investment accounts, the SACCO should issue a contract
document as a guarantee of the amount deposited and as an indication of the truthfulness
of the transaction with the user.

 Operational fees
o Operational fees charged shall cover the actual maintenance costs of handling the
account transactions.

 The following service fees may be charged subject to approval and determination of
amounts by the Executive: monthly service fees, replacement ledger card, replacement
passbook, deposit voucher book, withdrawal voucher book, cash deposit, cash withdrawal
slip, check deposits, check withdrawal, ledger fees, late payment, bounced cheques,
standing instruction fees, posting of payments to individual account, mobile money fees.

 The Executive may add, modify, delete or adjust fee categories and structures on an
annual basis.

 The fee schedule shall be developed and reviewed quarterly.

 The Executive may apply the following penalties:

o Charges for handling accounts considered inactive for a time period
o Accounts that have balances below the minimum authorised.
o Charges for return of checks received as deposits.
o Eliminate inactive accounts with marginal savings, which have exceeded the
established time period. The balances should be transferred to the undistributed
reserve account of the SACCO and subsequently after a prescribed period
transferred to the capital reserves of the SACCO.
o Penalties on interest rates of scheduled savings accounts and fixed term deposits
presented by members prior to their maturity; the penalties shall be applied
according to the conditions of each deposit.
o The SACCO is entitled to cancel savings accounts, which have been handled in a
dubious manner, outside the law or in an irregular way.
o Use part of the profits from the share certificates in paying off delinquent loans,
when the borrower is a member instead of capitalizing the profits.
 

 Withdrawals, refunds and inactive accounts

o A member is entitled to close his savings account at any time; in the case of
scheduled savings, the interest rate of the withdrawal will be penalized, according
to the agreed-to-terms.

 The following circumstances shall lead to withdrawal of a member’s deposits and saving
obligated for withdrawal: maturity of deposit, voluntary withdrawal, resignation, death of
a member, dismissal of a member and expulsion of a member from NACOBA.

 All members’ requesting for withdrawal must update their guarantor’s position before
their cases are processed.

 Save for deposits due for maturity which are available on maturity, a member may be
refunded the amount saved in his withdrawable deposit account within 30 days after
giving a written notification.

 In determining the amount to be withdrawn the SACCO will take into account all
outstanding liabilities including unpaid mandatory shares prior to honoring any request
for withdraw from any member.

 No member shall be allowed to withdraw his deposits unless the members loans are
repaid in full or the loan balance can be fully offset by the member’s deposits.

 Where a member is resigning or dismissed and is not able to immediately clear his loan
obligations he shall be required to make written request and arrangements with the
SACCO Executive for his repayments. The SACCO shall hold on to his deposits until a
full and final settlement has been agreed and honored.

 
  Where a member does not pay or defaults on obligatory monthly payments for three
months he will be obliged to write to the SACCO Chairman requesting for a grace period
and a payment plan not exceeding six months.

 After the expiry of the six months the member will either have to commence payments or
exit the SACCO. All amounts due to the member shall be paid within three months after
ceasing to be a member.

 The SACCO shall deem an account as dormant if no deposit has been made therein for a
period of one year. The SACCO must maintain a separate accounting record of all such
accounts.

 Savings, deposits and other sums due to a member may be deemed abandoned if the
member has contacted the SACCO in person or in writing within a period of two years,
or has otherwise not indicated an interest in the funds for the same period.

 Where savings have been deemed abandoned, the SACCO Executive through the
Treasurer shall give a 90 days’ notice to the member at the last known address of its
intention to close the account and transfer the abandoned funds to the capital reserves of
the SACCO. The Executive through the Chairman shall notify the member of the transfer
but the decision shall not be reversible. Such a member shall cease to be a member and if
he desires to re-join the SACCO he will have to make a written to the Executive which
shall decide appropriately including any fees or penalties they may charge him. Upon re-
admission the member shall also pay all the compulsory dues for membership as
applicable at that particular time.

 Where the member is reached, the Executive may transfer the abandoned funds, after
deducting all dues, charges and penalties, to him through the Treasurer and ceases to be
member. His readmission is subject to the same principles indicated in the foregoing
article.

 In the event the owner of the account dies, the savings should be transferred to the legally
identified beneficiaries.
 

 An individual trying to withdraw funds without being the holder of that account, and
without written authorization from the account holder to do so, will be denied the
withdrawal and the passbook or statement will be confiscated. The SACCO will notify
the holder of the account, but will not be responsible for further action.
 A member is obligated to submit or present an identification document when requested
by the SACCO and any time he requests a service as proof that he is the owner of the
account.

 Growth and management of mobilised funds

o Savings mobilization when done productively shall yield a reasonable growth and
income from loans advanced to members, which yield shall build the institutional
capital of the SACCO through capitalization of the surplus.

 In the absence of sufficient liquidity, the SACCO might need to sell assets with the
possibility of suffering large losses or purchasing funds under adverse market conditions
with excessive interest rates. Therefore the SACCO Executive must build transparency
and trust of members to make them feel ownership of the SACCO and avoid risks that
may erode member’s wealth in the SACCO. This requires following strong financial
concepts and building strong financial operations.

 The SACCO should be viable by following the principles of minimizing operational

expenses and risks, cover its costs and increase its yearly financial margin in order to
grow its capital base.

 The savings portfolio should only finance productive and income generating assets.

 Mobilized funds in the SACCO are intimately related to the institutional capital and
liquidity. Institutional capital represents all of the institution’s own resources used to
back up the sum total of risk assets maintained by the SACCO. It represents an
accumulation of net income from prior operations in the form of retained earnings,
regulatory reserves, cash donations and grants.

 
  The SACCO’s shall be obligated to maintain at all times a minimum net institutional
capital equal to eight per cent (8%) of total assets.

 If the SACCO has a shortage in the institutional capital, it shall be obligated to invest an
increased amount of deposits or mobilized funds in high-safety securities such as treasury
bills or fixed deposits in commercial banks . These securities may only be used for
deposit withdrawals.

 Considering that the business of SACCO’s is basically and fundamentally financial

intermediation, liquidity represents the capacity of the SACCO to efficiently cope with
the withdrawals of savings, term deposits, shares, other deposits and meeting its liabilities
as they fall due.

 The SACCO shall retain at least 15% of savings deposits in liquid assets. Fifteen per cent
(15%) shall be calculated on the total of savings deposits to meet immediate obligations,
term deposits, credits payables and securities.

 The determination of the SACCO’s liquidity adequacy depends entirely on the analysis of
the following SACCO elements:
o Historical financing requirements;
o Fund source stability (shares, savings and other capital);
o Stability of uses of funds (loans, investments, etc.);
o Projected needs of funds in the future; and
o Options for reducing the needs of funds or mobilizing additional liquid funds.

 Emphasis should be placed on the management of liquidity, because the stability of the
SACCO is intimately linked to liquid funds.

 When designing liquidity policies, the Executive or management must take into account
the effect that future events can have on the need for funds, as well as the possibility that
these events will occur.

 
  Cash flow should be prepared to forecast changes in the SACCO’s financial position,
investments and borrowings so that management will be able to:

 Evaluate the capacity to generate money through normal transactions, and

 Evaluate the potential for paying liabilities and the SACCO’s need for outside financing.

 The SACCO should target to mobilize members and members saving aggressively and
avoid depending on external funding as much as possible.

 Monitoring and management of savings and members

o The savings mobilization requires prior and parallel implementation of financial
disciplines necessary to protect the member savings, preserve an image worthy of
trust as a financial intermediary and establish a reliable market within savings
management.

 In the establishment of supervisory or internal control policies, the following should

issues should be considered:

 Does the SACCO have a planned program for its savings account structure?
 What are the liquidity needs of its members?
 Are the saving account terms matched with the loan accounts?
 Is the cost of funds adequate for the proper operation of the SACCO?
 Does the savings account structure allow adequate cash flow?
 Are savings growing, shrinking or remaining constant?
 Is there unusual activity in large savings accounts?
 Are savings account policies reviewed periodically and are they amended whenever
necessary?
 Do members only save for the purpose of obtaining a loan?
 Are the mobilization conditions competitive in the environment?
 How are the savings of the SACCO members protected?
 Is their dependency on mobilizing resources from a few savings accounts?

 Aside from the above, the following should be done:

 

 Permanent monitoring of competition to determine interest rates and the quality and type
of saving products developed.
 Permanently evaluate the structure of the mobilized funds to prevent concentration and a
mismatch in terms between funds mobilized and funds invested.
 Avoid mobilizing resources with non-market interest rates that are potential generators of
losses.

 Various protective measures for savings must be considered, which are:

 Cash payments on savings withdrawals presented on a given amount; payment with

checks when the withdrawal is over this amount.
 Maintain resources in highly liquid assets, if an irregular period in the savings market
occurs.
 The handling of accounts and withdrawals should only be done by the saver, who can
authorize the withdrawal or be directly authorized by the appropriate authorities.
 Institutional insurance payable by the SACCO to protect the savings of their members for
a specific amount.
 Custody of all of the documents should be taken into account according to the protective
and control measures applied by the SACCO.

 In serving members the Executive must take note of the following:

 Members’ sensitivity to prices and the quality of services.

 Give greater attention to the cost-benefit ratio.
 Identify and sell products that satisfy specific needs by identifying and understanding
members’ needs and satisfying their interests.
 Ensure cordial treatment of members and greater professionalism on part of employees.
 Have a greater propensity towards savings and lower level of indebtedness.
 Appreciate speed in transactions and responses in real time
 Ensure transactions are carried out in a framework of safety, transparency and
conformity. The service should be efficient, courteous and with uttermost competency.
 Have greater contact with entities through different means; i.e. standing instructions,
mobile money, telephones, Google groups, web forums which give ease of access to their
money and information about their money.
 Use of remote services so that they do not need to visit SACCO offices all the time.
 Seek greater information and positively embrace positive criticism.
 Replace process and operating routines with technology.
  Encourage a culture of thriftiness to lower costs and restrict unnecessary expenses.

 In the search to supply or attain a level of member satisfaction, the SACCO shall take
into account quality dimensions geared towards performance (operational characteristics
centered on immediate and transparent attention to members and customers) and features
(additional conditions offered by the saving product vis-à-vis similar products offered by
competition).

 There should be ongoing improvements in the saving products offered and geared
towards profitability so that sufficient income will be produced to cover the expenses as
they are incurred over time, protect assets and institutional capital from the effects of
inflation and satisfy the SACCO members.

 Savings internal controls

o All passbook entries or ledgers should contain teller identification and should be
documented with a receipt.

 Use documents with SACCO identification

 No SACCO official or employee may transact business on their account or a family

member’s account.

 Transfers between accounts are only allowed between accounts owned by the same
member.

 Employee and accounts of Executive members are to be reviewed for unusual or

abnormal activity on a quarterly basis by the supervisory committee.

 All members should be notified immediately in writing if there are any deposit errors.
 

 All change of address requests must be in writing and signed by the member.

 Any account in which there has been no activity for more than 12 months (interest
postings are not considered activity) shall be considered dormant.

 The dormant accounts should be segregated from the active accounts.

 When an account is transferred from dormant to active status the approval of the
Treasurer or Manager is required.

 When an account is closed the passbook/ledgers is returned and kept for one year.

 A list of closed accounts including the account number, member name, and reason for
closing shall be provided to members during the Annual General Meeting.

 On a monthly basis the Executive, through the Treasurer, shall publicize to members,
individually and collectively, the status of their savings. An annual report shall be
presented during the Annual General Meeting of the SACCO. The Executive should
ensure that resources mobilized are supported by reports submitted.

 Disclosure will be required on members who hold more than 20% of the total share
capital and deposits of the SACCO.

 The Executive must present terms and conditions of its deposit, share, and term or fixed
accounts in a disclosure available to all members.

 
  Every member must purchase the compulsory shares in their required amounts and
frequency.

 Members must have timely information and easy access to their savings while ensuring
that business and investment needs of the SACCO are fully met to grow members’
wealth. Therefore the SACCO must facilitate these desires through transparent
communication and application of automated systems and facilities.

 Implementation, interpretation and savings policy review

o Any violation to this savings policy shall be subject to disciplinary action as
prescribed by the SACCO Executive and as prescribed in this policy.

 The Executive can charge a punitive penalty or expel a member from the SACCO and
from making any further savings if he:

 Breaks or refuses to obey the rules and regulations as contained in this savings policy.
 Gives confidential information to any person who is not a member without authority from
the Chairman.
 Fails to save regularly without good reason

 The Executive and management must ensure that this policy is implemented without fear,
favor or bias.

 The Executive may waive, delay, fast track, suspend or reduce the period of
implementation of any article under this policy for a period of six months and subject to
one extension of the same duration or until the next Annual General Meeting whichever
comes first. Thereafter the Executive shall suspend and submit the article for repeal,
modification or amendment to the next scheduled Annual General Meeting.

 On an annual basis, the Executive shall be responsible for reviewing and adjusting the
savings policy. The Executive will recommend any such changes or amendments to the
net scheduled Annual General Meeting for adoption.
 

 Any adopted amendments shall be integrated as addenda to this policy.

 The Executive shall be responsible for interpreting any or all articles in this policy and
their decision shall be final, binding to all members and only subject to review by the
General Meeting at a duly convened meeting in accordance with the SACCO by-Laws

 
 

2. LOANS AND LENDING POLICY

o Introduction

 It is the desire, interest and obligation of NACOBA SACCO to provide its members with
loan products that fulfill the member’s needs and to establish a long-term financial
relationship between the SACCO with each member. The SACCO will function as a
financial advisor to its members. Members who are denied credit will be given financial
advice so that they can improve their financial situation. The SACCO may only grant
credit to those members who have a good reputation and are creditworthy.

 For NACOBA SACCO credit system to function there is need to have a lending policy to
guide the credit granting process. The Credit committee must follow these rules,
procedure and policies.

 The loan policy is intended to provide directions, guidelines and make provision for
proper and efficient utilization and administration of the SACCO’s loan portfolio in order
to ensure that the SACCO’s interests are adequately protected to ensure equitable
distribution of funds, encourage liquidity planning and enhance effective communication
and information flow between the SACCO and its members.

 The SACCO’s Executive Committee will be responsible for formulating, reviewing, and
adjusting the lending policy and forward their recommendations to the general assembly.
The general assembly will review this policy on an annual basis and make changes if
necessary so that it is reflective of daily operations. This policy shall be subject to review
 as may be proposed by the Executive Committee and approved by two-thirds of all
members of the SACCO.

 The SACCO Credit Committee will be responsible for ensuring that the lending policy is
adequately implemented and that it achieves the goals for which it was created. The
committee will determine if the policy is being complied with by periodically (preferably
monthly and no less than quarterly) reviewing a sample of loans granted and denied.

 In the execution of their operations the Executive Committee shall prescribe and
determine any such remuneration to members of the Credit Committee.

 The Executive Committee shall receive and review the operational budget as approved by
the Credit Committee. The Executive Committee shall have the right to modify and
adjust the budget appropriately and integrate the adjusted budget in the annual budget for
the SACCO. The Chairman of the Credit Committee will monitor and account for all
funds remitted to the Credit Committee.

 This policy include preconditions for granting loans, the minimum requirements, terms
and conditions and other relevant information on the credit management process.

 Any violation of this policy will be subjected to disciplinary action as prescribed by the
Executive Committee or as described in this policy. It shall be an offence for an
applicant, SACCO employee or committee member to give false information in the
assessment or appraisal of any loan

 Any difficulties encountered in the implementation of this loan policy should be referred
to the Executive Committee for final interpretation.

 Every borrower should have a copy of this policy, read it and internalize it. It is the duty
of the borrower to ask any member of the Executive Committee or Credit Committee for
interpretation of on any clause or article in this policy.
 

 BEING AWARE THAT lending is the principal business of the SACCO, in its lending
operations therefore, the principal of ZERO TOLERANCE FOR LOAN DEFAULTS
shall be the guide as it is important to note that non-payment of loans is the most
damaging threat to the survival of the SACCO, AND in an effort to achieve timely and
full loan repayment, the SACCO shall be mandated do the following;

1. Strictly abide by its Lending Procedures and Guidelines.

2. Avoid making rushed loans.
3. Never allow insider lending in the SACCO, that is to say, Members of evaluation
committee and credit committee, and other committees, management Staff plus their
relatives should never use their privileged positions in the SACCO to make undue
financial gains from the SACCO by accessing loans outside the provisions of the
SACCO’s Lending Procedures and Guidelines.
4. Make loan approvals and disbursements in batches to ease monitoring, follow up and
record keeping.
5. Maintain up-date loan records; registers and securely keep loan documents.
6. Ensure that full loan repayment is a responsibility of all members of the governance
structures.
7. Though the primary responsibility lies with the Executive assisted by management, the
credit committee shall help in the case of defaulting borrowers.
8. On their part, members and guarantors should alert the credit committee on bad
borrowers (when the lists of intending borrowers are displayed) and must exert social
pressure on defaulting borrowers to pay up.
9. Ensure equity in approving loan applications and determining loan sizes.
10. Show compassion and understanding to deserving cases.
11. Employ group-lending methodology in case of the growth of the SACCO to increase
outreach and attain high loan repayment rates.
12. Use loan graduation methodology to maintain borrower discipline.
13. Maintain close monitoring and follow up on all borrowers.

 Any committee members, management staff or SACCO Leader who does not comply
with the SACCO’s lending guidelines in handling loans shall be held personally liable for
the full repayment of the loans involved plus the interest thereon. If not desisted from, the
staff member or leader shall be dismissed from his / her position and later on, from the
SACCO.

 Revising or changing the lending procedures and guidelines to bring them in line with
developments in the market or changes in the operating environment shall be a
responsibility of the credit committee and Management through the Executive Committee
 and approval is to be done by the members of the SACCO in their Annual General
meeting.

 Lending requirements

 For a member of NACOBA SACCO Ltd to qualify for loan he must:

 Have been an active member for a period of not less than six months from the date of
registration. Active membership means that he has been paying monthly subscriptions for
the six months on schedule.

 Provide proof of residence, either a utility or electricity bill or an LC letter and a

residence ID.

 Accumulate at least six months continuous deposit on the minimum monthly

contributions as prescribed in this policy.

 Have saved at least one-third of the amount he wants to borrow one month before he can
apply for a loan.

 Request a maximum loan amount not exceeding three times his savings and subject to a
maximum of 50% of the total savings in the SACCO.

 Not defaulted on any outstanding loan or guaranteed a defaulting borrower.

 
 
  Not withdrawn his membership from the SACCO, otherwise he is treated as a new
member when he applies to rejoin the SACCO. A member cannot leave the SACCO
when they have an outstanding loan obligation with the Association unless as prescribed
in section 2.11 of this policy.

 Repay at least 75% of the total amount outstanding (i.e. principal and interest) before
applying for a top up/additional loan. The additional loan must not exceed 50% of the
initial loan borrowed and must be fully secured in accordance with section 2.11 of this
policy.

 The member shall contact a credit officer for an appointment to apply for a loan. Prior to
the recruitment of a credit officer, members shall contact the Treasurer. The credit officer
or treasurer shall discuss and determine eligibility with the member.

 After determination of eligibility the member shall complete personal information on the
application form and return to the office for final completion analysis and approval and or
submission to the credit committee.

 A member not found eligible for a SACCO loan shall not be required to complete a loan
application form unless authorised by the credit committee.

 Loans relating to medical, court fines, death and other unforeseen happenings beyond a
member’s control are treated as emergency loans and may be given express consideration
and approval by the Chairman and Treasurer and later ratified by the Credit Committee.
Such loans however shall not exceed 85% of the member’s total savings and shall be
repayable within a period not exceeding three months.

 School fees loans may be granted to a member even though he has an outstanding loan
provided the total of all outstanding loans, including school fees, must never exceed three
times a member’s savings.

 
  The first security and principal guarantee applicable to a loan is the member’s savings,
followed by guarantors and finally by asset based security.

 All loans will be restricted to members only and should be approved by the Credit
Committee. No member of the loan approving committee shall be present when his loan
application is being considered.

 The Executive Committee should constantly be briefed by the Chairman of the Credit
Committee during their monthly meeting on performance of loans issued.

 All loan applications shall be made in a prescribed form of the SACCO, must be
completed and shall in each case set out the amount applied for, the purpose of the loan,
terms of payment and type of security provided, desired loan maturity, membership
number, borrower name, borrower address and telephone number, signature of borrower,
names and signatures of guarantors, savings guaranteed and/or security where applicable.
All loan applications must be submitted through the Chairman of the Credit Committee.

 No loan shall be advanced without a complete form, except for emergency loans where a
form shall be completed with 48 hours. If a member advanced an emergency loan fails to
complete an application form within the prescribed time, the principal and interest due
will be charged from his savings immediately by the Treasurer.

 It shall be an offence for an applicant, to give false information regarding deposits,

shares, loans and guarantees. Disciplinary action or termination shall be taken as
prescribed by the Executive Committee.

 Loan applications shall be considered on the order of first come first serve basis.

 Whenever there are more applications for loans than there are funds available; preference
will be given, in all cases, to smaller loans.

 
  However, where amounts applied for are approximately the same, preferences, priority
shall be given in the following order:

1. Members who have never had loans.

2. New members who have qualified for loans.
3. Members who have cleared their first loans and have applied for fresh loans.

 NACOBA SACCO shall maintain 15% reserves of the member’s savings as cash
reserves. At least 85% of the cash reserve shall be kept in a deposit account and will be
available for granting loans. This reserve fund shall be replenished from time to time.

 Loans can be granted for any legal and lawful activity.

 The Credit Committee should not grant any loan which in their nature are considered to
be of speculative business, or to finance existing debt in the SACCO, for political
activities, projects with a long investment recovery, loans applied by a member to be used
by a third party or unprofitable business.

 To a great extent possible loans relating to merchandise or property purchase, assets and
services shall be paid directly by cheque to the person providing the service. The
applying member must attach to the loan application pro-forma invoices from his supplier
for the goods and or services being purchased.

 All other loan disbursements are to be paid in cash and acknowledged on a payment
voucher or paid by cheque to the borrower only. Such payments shall be made by the
Treasurer of the SACCO within the prescribed time under this policy.

 No member or group of members who are considered to be related for credit purposes,
such as family businesses or closely related family members (those dependent on the
same source of income), may borrow (both secured and unsecured loans) or be obligated
to the SACCO, in excess of 50% of their joint savings.

 
  Loan approval

 All loans MUST be approved by the Credit Committee. In approving the loans the Credit
Committee will carry any or all the following functions:

1. Analyze the information in the loan application form.

2. Verify the loan purpose.
3. Understand the financial status of the applicant.
4. Assess whether the savings are sufficient and correspond to 1/3 of the loan amount.
5. Where applicable confirm from guarantors that they have guaranteed the member
6. Where applicable, determine the market value, verify the genuineness and locate the
security offered by the loan applicant.
7. Interview and provide financial counseling to the loan applicant.
8. Determine the reliability of the applicant according to their personal history.
9. Establish a personal relationship with the applicant.
10. Sell other SACCO services and educate the member about the SACCO philosophy.
11. Monitor the progress of businesses undertaken by applicants that were funded by SACCO
loans.
12. In consultation with the Chairman and Treasure of the SACCO, have a clear
understanding of the liquidity position of the SACCO.
13. Making follow-ups on all borrowers who fail to repay their loans in time.
o The Credit Committee, appointed by the General Assembly and comprising of
five members, shall meet at least once a month or as shall be agreed from time to
time and upon prior approval of the Executive Committee. The committee will
comprise a Chairman, a Secretary, and three members. The committee will serve
a two year term and a member shall not serve in the same position for a period of
four consecutive years. When appointed, the Manager of the SACCO shall be an
ex-officio and Secretary of the credit committee.

 The Association Treasurer shall be an ex-officio of the Credit Committee with no voting
powers but his absence shall not deter the meeting, deliberations and actions of the credit
committee to proceed.

 The members of the credit committee may be paid a sitting allowance to cover the direct
expenses associated with attending the meetings. Such allowances shall be determined by
the Executive Committee and approved by the Annual General Meeting.

 
  The credit committee may coopt another member or employee to help it in the loan
approval process but such members shall not part in the decision making process and
shall not be entitled to any allowances.

 Notwithstanding the functions of the credit committee as stipulated in this policy, the
credit committee shall exercise total independence in course of executing its duties and
shall not be unduly influenced by any members, committee or Executive of the SACCO.

 Apart from handling loan applications and helping the Executive follow up on defaulting
borrowers, the credit committee shall not be involved in the SACCO’s routine
management business.

 At least three members of Credit Committee shall be present to approve loans. One of the
members present shall either be the Chairman, or Secretary of the Credit Committee or a
representative from the Executive Committee. In the absence of the Chairman or
Secretary, members present shall appoint among themselves a Chairman or Secretary
respectively but not both.

 A credit committee member who commits a material breach of this policy, undermines
the objectives of the Association, is incompetent, fails to attend three consecutive
committee meetings, engages in gross misconduct or behavior or has physical or mental
impairment that renders him to perform his functions, shall be summoned by the
Executive Committee, through the Chairman, by notice of at least seven days prior to the
meeting, and failing a satisfactory explanation or non-attendance, may be cautioned,
suspended, required to resign, removed from the committee or expelled from the
Association by the committee. In the event that a member resigns or is removed from the
Committee or expelled from the Association, the Executive committee may appoint a
member of the SACCO, excluding any of them, to fill the vacancy until the general
meeting appoints a substantive member. The Expulsion shall be by unanimous vote of the
all members of the Executive Committee and subject to appeal to the general meeting.
The resolution of the general meeting shall be final and binding to all parties.

 A credit committee member may resign in writing to the Chairman clearly indicating the
effective date of resignation. The executive committee shall appoint any member from
the SACCO with the exception of any member on the Executive Committee, to act in
 interim until the general meeting appoints a substantive member to replace the member
who resigned.

 The Executive Committee by unanimous resolution, may suspend the credit committee
and its operations when it is determined that they are highly compromised, are engaging
in fraudulent activities, are executing their mandate outside this policy or are non
performing. The Executive committee shall take up the mandate of the credit committee,
excluding powers to grant themselves loans, until a new credit committee is elected at the
next sitting of the general meeting.

 Members of the credit committee are indemnified from and against all costs, charges,
losses, damages and expenses whatsoever which may arise in the execution of their
mandate under this policy unless the same shall arise by reason of their own willful
neglect or default as resolved by the Executive Committee.

 Loans for any member of the Executive Committee shall be recommended by the Credit
Committee but approved by the entire Executive Committee. All loans for members of
the credit committee shall be handled and approved by the Executive Committee after
receiving appraisal reports from the SACCO manager. In processing and approving
loans, no preferential treatment shall be given to the credit committee members and any
other members of the governance committees. The lending policies shall apply equally to
all members.

 A member may be called to defend or justify his loan application. Failure to appear may
lead to the cancellation of his application. Committee members’ personal interests shall
be declared to the other members and the concerned member shall disqualify himself
from the approval process of such application.

 The interview process focuses on the member’s loan qualifications and the condition and
value of the collateral (if any is offered to secure the loan) in order to help the committee
make an informed decision. The committee may also reject a loan where a member fails
to disclose his financial status on request.

 
  All loans must be considered within a period not exceeding 7 days from the date of
application.

 If the committee does not feel that they can approve a loan as requested, they may make a
counteroffer and the member has 2 days to accept or reject the counteroffer.

 The Credit Committee shall approve loans based on character, credibility, ability, margin,
purpose, amount and repayment proposal of the applicant.

 Members will be informed, within the deadline of approving loans prescribed in this
policy, whether or not their applicant has been approved or reject. If rejected, the
applicant will be informed on the reasons for rejecting his application.

 The borrower will be informed in writing of all loan denials. The reason for the denial
will be specifically addressed. Credit counseling, where necessary, will be offered to the
borrower in hopes of improving their credit so that they will be eligible for credit in the
future.

 The SACCO shall employ a credit officer to manage the loan portfolio, maintain records
of members’ loan application and approvals, scrutinize loan application forms to ensure
they provide accurate information, are accompanied by all required supporting
documentation and ensure they are ready for the credit committee meetings. The credit
officer shall be the liaison person between the loan applicant and the credit committee
and shall pass on information to the member when decision is made.

 Loan appraisal and analysis

o The following information shall be provided and considered in loan appraisal
before a loan application is accepted by the credit office or credit committee. The
information shall be analyzed to give a fairly comprehensive picture of the
applicant such as:-

1. Personal History
2. Credit History
3. Current financial position
 4. Fulfillment of rules and regulations pertaining to application

 The interview process

o A complete investigation of the member should seek to:

1. Verify all information obtained

2. Yield additional information
3. Procure information not disclosed by member

 Investigation

 The purpose of the investigation is to obtain information about the borrower.

 Source of information

1. SACCO file
2. Other creditors/people
3. Income verification – salary slip etc.

 Security

1. Applicant’s shares and savings.

2. Guarantors shares and savings
3. Guarantors can only guarantee to a maximum of 50% of their saving and share holding

 Character
o The member’s reputation and willingness to pay the loan. The member’s
willingness to pay particularly under adverse conditions shall be considered and
the following information shall be analyzed:

1. Family status – no. of dependents.

2. Personal referees.
3. Stability of employment/business
4. Land/home ownership
 5. Type of job
6. Length of membership in the SACCO

 Capacity
o Will a member be able to pay even if he is willing? Capacity shall be an all
embracing word including the attributes of ability knowledge, financial
circumstances, physical facilities and external factors. Capacity to pay shall be
determined from: –

1. Pay-slip; to know the member’s salary, if employed

2. Business records, if engaged in business.

 
 

 Collateral
o It will always be ensured that the value of collateral is conservative. Security
offered shall ensure the borrowers continued interest in the repayment of the loan
and provide a measure of ultimate safety for the loan. Collateral shall generally be
taken to ensure the borrower has a stake or commitment in the transaction for
which the loan is sought and shall also provide inducement for the borrower to
ensure ultimate and orderly repayment of the loan and provides for the recovery
of the loan in case of default in payment. Collateral shall include, in order of
priority and preference, members’ savings, guarantors, business proceeds and
asset based security.

 The combined collateral should at least cover 1.5 times the loan and interest combined.

 Credit worthiness
o Credit represents a member’s commitment to meet his obligations usually
obtained from past borrowing records – past loan record with SACCO. The
information shall be obtained from SACCO file

 The credit officer shall compile a member’s file with the following and present it to the
credit committee:

1. Complete duly signed form

 2. Investigative report
3. Analysis
4. Recommendation

 The credit committee shall base its decision on the information provided.

 Appeals

 Whenever a member feels that his application has not been considered fairly, he shall
appeal stating the grounds of his appeal in writing to the Executive Committee through
the Chairman of the Executive Committee within fourteen days after the decision date.
The Executive Committee’s decision thereafter will be final and shall apply with
immediate effect.

 The Executive Committee may reject any loan application, prior or during a loan review
or block any member from obtaining a loan from the SACCO.

 Loans disbursement

 The credit officer shall ensure that: –

1. Before accepting a loan application and after funds are released, members’ clearly
understand the terms and conditions of the loan.
2. A member understands other provisions of the loan.
3. That security documents are in place and receipted.
4. Funds shall be released to the member by crediting that member’s account or by cash,
cheques, mobile money or Electronic Funds Transfer (EFT).
5. Member must sign appropriate forms in acknowledgement of receipt of Funds.
o Loans contract

 A loan contract shall become effective as soon as a loan is approved by the credit
committee.
 

 A loan contract shall contain the following information:

1. Title – i.e. Loan contract.

2. Name and address of SACCO.
3. Name and address of borrowing member.
4. Date of the contract.
5. Loan amount and purpose.
6. Period of loan/duration/term.
7. Price of the loan (interest).
8. Repayment structure (monthly etc) and number of such payments and due date
9. Security Pledge.
10. Associated conditions.
11. Signature of SACCO’s authorized officer (s).
12. Signature of borrower /member.
13. A loan contract must be witnessed and dated and for follow up purposes include physical
address of both borrowers and witness.

 Loan monitoring and loan performance

 Loan monitoring shall include the process of tracking the activities of the borrower’s
business/cash flows and his behavior/business conduct and reporting these observations
to the SACOO.

 Loan monitoring shall be done to protect the finances of the SACCO and ensure that the
loan proceeds are used for intended purposes and shall mostly be done for loans where
repayments will be the borrowers business and employment.

1. Remittances of loans should be deposited in SACCO Account.

2. Member must submit reports to SACCO in time as determined by the SACCO completed
together with SACCO loan monitoring committee.
3. Members must sign a monitoring agreement.
4. Loan monitoring shall not be intended to interfere with the member’s business but to
reinforce the relationship between member and SACCO should problem occur.
5. Monitoring reports shall be a regular part of the agenda for EC meetings along with
reviewing payments received and due during the SACCO Manager/Credit Committee
reports to the EC.
6. Loan monitoring shall be a continuous process. It shall only stop when the loan is paid
off completely.
 

 Loan performance standards

o In managing its lending operations, the SACCO shall be guided by the following
Key lending standards (measured as ratios):

 
Criteria Analysis Factor Performance indicators
Loans to savings + To what extent are the mobilised Total loans outstanding
share capital ratio savings and share capital meeting Total savings + Share Capital
funding needs for loans?
Standard: High ratio above 60%
signals liquidity difficulties.
Loans to Assets RatioFinancial strength: To what extent is Total loans outstanding Total
the SACCO capable of providing loans Assets
to its members? Standard: Should be > 5
Cost of Lending Operating efficiency: Are loans being Total Expenses
given at the lowest cost? What is the Total loans disbursed
average cost per loan?
Standard: Should be as low as
possible.
Cost per shilling lent Operating efficiency: What is the Total Expenses
average cost incurred for each shilling Total loans
lent?
Standard: Should be as low as
possible.
Rate of return on Financial Strength: What is the rate of Total income from loans
loans return on loans? outstanding
Standard: Should be greater than
the lending rate.
Liquidity How able can the institution Cash + Near Cash
meet the cash demands of its Investments
clients and creditors Total Savings Deposits +
Share capital + Any other monies
on call
Standard: 30%
Delinquency Measure of the portfolio Total loans past due date
Indicator quality (Portfolio at risk). Total loans outstanding
To what extent is non- Standard: 2%
 payment of loans a common
occurrence?
 

 Repayment

 Loans are repaid within a period not exceeding 6 months and as prescribed by the Credit
Committee. Repayment terms shall clearly show separately, amounts relating to the
principal and interest amounts to be paid, the installments to be paid per period and the
frequency of payments per month.

 In duly exceptional circumstances and following a written request by the borrower, the
loan repayment period can be extended to 12 months upon recommendation of the credit
committee and subject to approval by the Executive Committee.

 An interest fee not exceeding 10% per month or 120% per year will be charged on the
outstanding principal amount. If deemed necessary the Executive Committee may charge
a late fee on any payments which are due and outstanding. Simple interest will apply
when computing interest. Interest rates shall be reviewed annual by the Credit
Committee, endorsed by the Executive Committee and approved by the General
Assembly during the Annual General Meeting

 Payments received from a borrower shall have the following payment preference: 1-legal
costs, 2-late fees, 3-interest and 4-principal.

 Loans repayments shall commence in the month following the one in which the loan was
granted to a member. Loan repayments in any month shall be due on the day when the
loan was advanced.

 In the event that a member is not able to meet his monthly loan payments and before 7
days after the due date, he will request in writing or by e-mail, for a deferment, through
the Chairman of the Credit Committee, stating the reason and the proposed new date
when the loan will be settled. The Chairman of the Credit Committee may set a grace
 period, on any repayment which shall not exceed 7 days, to allow for monthly payments
without incurring a late fee. If the member does not honor his obligations within 7 days,
the Chairman shall forward his case for review to the Credit Committee.

 The Credit Committee subject to the reasons given by the borrower may approve the new
payment plan in its entirety, modify it with the consent of the borrower or reject the
proposal stating in writing the reasons for rejection. All such requests will be reviewed
and concluded within 7 days following written notification to the Chairman. No member
will be granted more than one deferment any loan.

 A member in default and his guarantors will be notified of a default after 7 days from the
due date.

 Except loans modified upon approval of the credit committee as specified in section
2.10.7 above, all other loans and after 7days, all loans in default shall attract a late fee of
10% on the amount due and outstanding or UGX 5,000, which is ever is greater.

 Loan payments will be accepted on any day. Evidence of payment will always be a
written receipt.

 All loan repayments shall be deposited on the designated SACCO account. Funds paid by
borrowers shall not be expended before they are deposited on the designated account.

 If the borrower’s cash flow is such that monthly payments cannot be made, then quarterly
payments will be accepted, preferably with monthly payment of the interest due.
However this payment plan has to be approved by the Credit Committee at the time when
the loan request is approved.

 Loan repayments shall be paid in full installments based on the loan agreement. Nothing
in the foregoing prevents any member from repaying his loan and interest in whole, or
part, prior to maturity without penalty.
 

 Guarantee

 All Loans MUST be FULLY guaranteed. The Credit Committee may however waive the
full guarantee requirement and make a loan unsecured up to a limit of 30% of the loan
advanced or UGX 500,000 whichever is lower.

 Total unsecured loans shall never exceed 10% of the total savings of members or UGX
10,000,000, whichever is lower.

 Loans can be secured by guarantors, savings, title deeds, household appliances, vehicle,
business proceeds, or any movable or immovable asset as recommended by the credit
committee and approved by the Executive Committee. All security items must be owned
or be in the borrower’s names.

 No member will be allowed to guarantee more than two loans or guarantee an amount in
excess of his compulsory savings. All guarantors must be members of the SACCO.

 Members of the Executive Committee or Credit Committee shall not act as guarantors to
one another but shall obtain guarantors from other members in the SACCO.

 The obligations of the previous guarantors shall cease upon change of guarantors but
subject to new guarantors being accepted by the Credit Committee. The obligation of the
guarantors shall also cease when loan has been fully paid.

 Any member with, or guaranteed, an outstanding loan shall not withdraw part of his
deposits or offset part of the deposits against an outstanding loan unless he ceases to be a
member.

 
  A member’s savings pledged as security for another member’s loan can be withheld to
offset the outstanding loan guaranteed, unless the former can provide an alternative
security for the latter. This decision will be adopted by the Credit Committee and
approved by the Executive Committee

 The Chairman of the Executive Committee must ensure proper custody of all securities.
All securities for loans fully repaid must be handed back to the borrower immediately his
loan is fully paid.

 Where a title deed is used as security, the Credit Committee must ensure the title is
verified with a search at the Ministry of Lands and a physical inspection of the land is
done to ensure it has no physical or legal encumbrances.

 Any valuation, search or legal fees shall be paid by the member. Such costs shall not
exceed 5% of the amount loaned.

 While in office or work relationship, no committee member or SACCO employee may

guarantee or co-sign other members’ loan agreements

 Defaulters and withdrawals

 The SACCO shall pursue a strategy of 100% percent recovery of loans and a loan shall
be considered in default:

1. When regular scheduled payment is not made.

2. When term expires and there is a loan, balance.
3. When payment is applied to principal only and interest is not collected.
4. When interest is being paid without principal.
5. When loan contract is violated.
6. When loan Policy is violated.
7. When security becomes deficient.

 The credit committee shall do the following in order to minimize delinquency

 1. Loan monitoring.
2. Loan follow up.
3. Secure collateral provided.
4. Ensure member understands loan conditions.
5. Ensure loan collection systems and procedures are in place.
6. Maintain up to dates records.
7. Due care by the governance committees to avoid insider
8. Lending because of their privileged position.

 In the recovery of outstanding amounts due from defaulting borrowers, the credit
committee, by notice to the Treasurer, shall first charge the full amount of the members’
savings, if not sufficient, they call on the guarantors to pay the amounts guaranteed. If the
guarantors reject to pay within the prescribed time, the Treasurer will immediately charge
their savings and notify them accordingly. If the amounts are not sufficient to fully
recover the full amount of the loan, the Treasurer will liquidate any asset provided by the
borrower. The proceeds from the asset if are in excess of the balance due, shall be
refunded to the borrower, or if less, the Executive may recommend other recovery
measures as prescribed in this policy or recommend that the amounts be written off as a
loss to the Association.

 In the event of death of a member, the outstanding loan is written off less any savings due
to the member. Guarantors shall not be required to pay any amounts guaranteed for a
deceased member, unless such amounts were due and payable following default of any
amount due by the deceased member and is in excess of his savings.

 No member shall be allowed to withdraw from the SACCO membership unless his loan
is repaid in full or the loan balance can be fully offset by the member’s savings or from
the guarantor’s savings. Such a member will also have to satisfy the Credit Committee
that the loan guaranteed has been paid in full or that the outstanding balance does not
exceed his savings or savings of the guarantor (s). However exceptions to this rule can be
considered under clause 2.7.3 of this policy.

 Any member granted a loan and writes a letter to withdraw from the SACCO before
repaying the loan with a remaining period for six months shall be charged interest for the
remaining duration of the repayment period.

 
  Where a member who is retiring or resigning is not able to clear immediately any
outstanding loan, he shall be required to make arrangements with the SACCO Chairman
for payments. The Chairman will present the case to the Executive Committee for review
and final resolution.

 The SACCO will be required to ensure that no loan is granted beyond the
retirement/resignation date of a member if that date is known unless prior arrangements
have been made with the Executive Committee.

 In case any amount due is not paid within one month from the due date, the Chairman of
the Credit Committee shall inform the borrower immediately in writing with a copy to
each guarantor. If no repayment is effected during the second month, the guarantors shall
be called upon to honor their obligations. If any amount is due for a period of two months
the Credit Committee may recall the whole loan and demand the payment of the full
amount outstanding either from the borrower or the guarantors. However, the SACCO
through the credit Committee will still maintain efforts to recover the defaulted loan from
the borrower.

 If a member has caused the SACCO a loss, no business will be conducted with that
member until the loan is repaid. Once the loss has been fully repaid the member shall be
eligible for credit in accordance with the loan policies and standards. If the member is
repaying the loan in installments and applies for new credit before payment of the final
installment, the application will be reviewed considering relevant factors. These factors
will include: the amount of the unpaid loss, the number and regularity of the installments
made, the amount of credit and the purpose of the new loan request, and whether the
credit request is to be secured by collateral or co-signers

 Loans management and reporting

 The Chairman of the Credit Committee shall at the end of each month prepare a listing of
all loans whose repayment date has been defaulted in the following order 0-2 months, 3-
6months, 7-9months, 10-12 months and 12months and over. This list shall be presented at
the Credit Committee meetings detailing action taken to minimize potential loss to the
SACCO.

 
  This shall be done so as to: –

1. Determine how long a loan has been delinquent.

2. Categorizing loan according to the period of delinquency (number of months overdue).
3. Determine the extent of risk exposure to the SACCO.
4. Determine the allowance required to cover the potential loss, which shall be determined
in accordance with the provisions of the by-laws. Objective classification of bad and
doubtful loans and making provisions for them should be made as follows

 Loan Aging and provisioning.

Classification (No. Days Over due) Provisioning (Rate to be applied   to the loan with any
amount that is overdue while making provisions).
1 – 30 days 5%
31 – 60 days 15%
61- 90 days 30%
91–120 days 60%
121-180 days 85%
181 days and above 100%
 

 All security pledged or guaranteed shall be realized whenever a loan is outstanding for
more than two months.

 During the annual general assembly the Chairman or a person delegated by him shall
present a loan portfolio evaluation including but not limited to the following:

1. Total number and shilling amount of loans,

2. Number of loan denials,
3. Ratio of loans approved to applications received,
4. Average loan size,
5. Number of short (less than 6 months) and long term loans
6. Number and percentage according to loan collateral,
7. Ratio of borrowers to members,
8. Ratio of loans to savings,
9. Ratio of loans delinquent more than 1 month to total loans,
10. Ratio of net loans written off (total loans charged off for the period – any loan recoveries)
to outstanding loans

 
  Loan collection and legal systems

 Where unfortunately there comes a time when members do not repay their loan
obligations and action is necessary to get members to make repayment arrangements an
efficient collection system shall be used. The system outlined shall be followed to ensure
maximum efficiency is guaranteed.

 The following collection steps shall be undertaken

1. Member’s loan file shall be pulled and action is recorded on member character card.
2. Determine security and exposure.
3. Phone member to make repayment arrangement.
4. If no response to phone call or member is not on phone
5. Then written notice giving 7 days. (Enquire to determine cause or problem).
6. Note all actions in collection/character card file copy of letter and diaries.

 After 7 days, the following steps shall be taken:

 14 Days’ Notice

1. Personal contact by visitation

2. Mail notice/ written notice
3. Record on collection/character card and diaries
4. Inform member failure to respond may result in action such as realization of security i.e.
savings, and other collateral/guarantors shares and salaries.

 
 

 21 Days’ Notice

1. Inform member that action shall commence 7 days from date of this notice/letter unless
repayment arrangements are made. The applicant’s savings shall then be attached.
o Legal procedure
  In the event of failure to collect the total loan as per collection procedures
above, the guarantors savings shall be attached at the same time the
borrower’s savings are attached. In an extreme case where the total loan
cannot be recovered even after attaching guarantor’s shares the file shall
be transferred to a lawyer or debt collector. The lawyer/debt collector shall
determine the action to take which may include the following:

1. Collection by demand.
2. Magistrates courts.
3. High court

 This process takes time and money. Members shall therefore be notified that they shall be
responsible for all resultant costs. The Court shall be the last resort.

 A cost benefit analysis shall be carried out to determine the ones to be taken to the
lawyer. If loan amount in default to cost is greater the allowance for doubtful loans shall
be recommended.

When all measures to collect have failed the loan shall be taken to the executive committee and
finally recommended for write off to the General Assembly.
 

 Loans documentation

 The Chairman of the Credit Committee shall maintain an up to date documentation of

loan files and ensure that each loan file has the following information in place: loan
application, loan agreement, receipt/acknowledgement of security documents and
member’s personal statements.

 All applications forms either approved or not and all minutes of the Credit Committee
shall be filed and retained by the Secretary of the Credit Committee.

 Credit Committee members are to sign minutes after each meeting.

 

 All loan applications should be numbered in sequential order. All loan applications will
be recorded in a loan register.

 
 

3. Adoption

 Adoption
o This policy was discussed, reviewed, approved and adopted for implementation as
a savings policy and procedure of NACOBA SACCO at the Association’s
General Meeting Held on ………………………….. at
…………………………… and takes effect from
………………………………………………

 It is approved under Minute Number …………………………………………………….

 Witnessed by:

Chairman           …………………………………….                                

Date………………………
 
Vice Chairman   …………………………………….                                
Date………………………
 
Secretary           …………………………………….                                
Date………………………
 
Treasurer           …………………………………….                                
Date………………………
 
Mob Secretary   …………………………………….                                
Date………………………
 
Legal Advisor     …………………………………….                                
Date………………………
 
 

 ANNEX 1-Membership application form

 
 
 
 

 ANNEX 2-Loan application form

 
Name of Physical Duration of Number of times borrowed from the
Applicant Address membership in the SACCO:
SACCO  
 
 
Membership no. Savings Account Amount borrowed & balance outstanding on previous loan:
no.  
Marital status Next of Kin Number of dependents
 
 
Amount of loan applied for: UGX:
…………………………………………………………………….
 
Amount in words:
………………………………………………………………………………………………………
………
 
………………………………………………………………………………………………………
……………………………………
 
………………………………………………………………………………………………………
……………………………………
 
Purpose for which the loan is required:
 
………………………………………………………………………………………………………
……………………………………
 
………………………………………………………………………………………………………
……………………………………
 
Source of funds for servicing the loan:
 
………………………………………………………………………………………………………
……………………………………
 
………………………………………………………………………………………………………
……………………………………
 
Value of savings in the SACCO: UGX:
……………………………………………………………………………….
 
Outstanding loans in other institutions: UGX:
………………………………………………………………..
I undertake to repay the loan applied for with interest thereon on the due dates agreed upon with
the SACCO.
Guarantors:
 

 I,
………………………………………………………………………………………………
………….
 
undertake to repay from my SAVINGS, and Other Sources Up to UGX ……………………….
 
( Amount in
words………………………………………………………………………………………………
…………….
 
………………………………………………………………………………………………………
……………………..)
of the loan owed by the applicant to the SACCO if the applicant fails to repay the loan granted
by the SACCO by the time it is due.
 
Membership no: …………………………………………………….
 
Savings A/c……………………………………………………………
 
Signature: …………………………………………………………….
 
Date: …………………………
 
 

 I,
………………………………………………………………………………………………
………….

 
undertake to repay from my SAVINGS, and Other Sources Up to UGX ……………………….
 
( Amount in
words………………………………………………………………………………………………
…………….
 
………………………………………………………………………………………………………
……………………..)
of the loan owed by the applicant to the SACCO if the applicant fails to repay the loan granted
by the SACCO by the time it is due.
 
Membership no: …………………………………………………….
 
Savings A/c……………………………………………………………
 
Signature: …………………………………………………………….
Date: …………………………
 

 I,
………………………………………………………………………………………………
………….

 
undertake to repay from my SAVINGS, and Other Sources Up to UGX ……………………….
 
( Amount in
words………………………………………………………………………………………………
…………….
 
………………………………………………………………………………………………………
……………………..)
of the loan owed by the applicant to the SACCO if the applicant fails to repay the loan granted
by the SACCO by the time it is due.
 
Membership no: …………………………………………………….
 
Savings A/c……………………………………………………………
 
Signature: …………………………………………………………….
 
Date: …………………………
 
 
Additional Security:
 
Savings attached as Security (UGX …………………………………………………………)
 
Assets mortgaged:
…………………………………………………………………………………………………
 
………………………………………………………………………………………………………
…………………………
 
Signature of Applicant:
…………………………………………………………………………………………………
 
Date:
………………………………………………………………………………………………………
………………………..
 
For SACCO use only
To be compiled by the Credit Officer.
Loan Amount Period Current Comment
Status
1        
2        
History of previous borrowing from the SACCO
 
 
 
 
 
 
 
 
 
 
 
Credit Officer’s comments:
 
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Signed: ………………………………………………………………
 
 
Date………………………………………………………………