6WANA-ANGA SACCO SOCIETY BACK OFFICE LOAN POLICY

You can Download the Loan application form here

1.0 INTRODUCTION

The loan policy for Savings and Credit Co-operative Societies (commonly referred to as SACCO societies) was last reviewed in 1992 under the Commissioner’s circular letter No. MCD/ORG/7/VOL11/55 of 6th August 1992. Since then, a lot of development (i.e. liberalization has taken place within the SACCO societies thereby necessitating the revision of the policy guidelines.

The revised loan policy as a whole is designed to conform with and supplement the By-laws of Wana-Anga SACCO society with a view to:-

a) Ensure that Wana-Anga gives loan in an efficient manner.

b) Facilitate loan processing and improve loan recoveries so as to achieve wana-anga objectives.

1.1 TYPES OF LOANS
BACK-OFFICE SERVICE ACTIVITIES (BOSA)
  1. Total BOSA loans shall not exceed 7 times a member’s deposits.
  2. Total BOSA loans for a single member shall not exceed 10% of SACCO core capital and reserves.
  3. The BOSA Loan shall be financed by the members share deposit contribution.
  4. The BOSA products shall include:
    i) Normal/Development Loans
    ii) Super Normal Loan
    iii) Deposit Boosting Loan
    iv) Dividend loan
    v) Emergency Loan
    vi) School fees Loan
a) Normal/development loans

This loan enables members to finance personal development projects.

  1. Maximum Amount: 3 times the member’s deposits.
  2. Maximum Repayment period: 48 Months.
  3. Interest charged: 1% per month on a reducing balance.
  4. Loans security accepted: guarantors, collateral.
  5. Disbursement: Within 30 days from the date of approval and board ratification.
  6. Qualifications: A member qualifies for only one normal loan at any given time.
  7. Approval: By Board Credit committee for all amounts.
  8. Commission:5% upfront for restructuring existing Normal loan.
b) Super Normal Loan

This loan enables members to acquire assets & finance other development projects.

  1. Maximum Amount: 6 times the member’s deposits.
  2. Maximum Repayment period: 72 Months.
  3. Interest charged: 2% per month on a reducing balance.
  4. Loans security accepted: guarantors, collateral.
  5. Disbursement: Within 30 days from the date of approval and board ratification.
  6. Qualifications: A member qualifies for only one Super normal loan at any given time.
c) Deposits Boosting Loan

This loan will be granted to members who wish to boost their deposits.

  1. Repayment period 12 Months.
  2. Interest charged: one-off 7% upfront.
  3. Loans security accepted: Self guarantee.
  4. The amount boosted can only be considered for FOSA loan.
  5. Disbursement: to the member’s deposit account.
  6. Qualifications: One deposits boosting loan at any given time.
d) Dividends In Advance

This loan granted to member who wish to take a portion of their dividend or interest on deposits within two months before payment.

  1. Maximum Amount: not exceeding 70% of the expected dividends on shares/interest on deposits earned previous financial year.
  2. Repayment period Cleared from dividends and rebates.
  3. Interest charged: 2% one-off.
  4. Loans security accepted: Dividend and rebates expected.
  5. Disbursement: Within 24 hours from time of approval.
  6. Qualifications: must not be not a defaulter.
e) Emergency Loans

Emergencies include unexpected hospitalization, and unforeseen circumstances beyond a member’s control.

  1. Maximum Amount: Ksh. 300,000.00.
  2. Repayment period: Maximum 12 Months.
  3. Interest charged: 1% per month on a reducing balance.
  4. Loans security accepted: Guarantors.
  5. Disbursement: Within 24 hours from the time of approval.
  6. Qualifications: only one emergency loan at any given time.
  7. Proof of emergency: Provide proof of the emergency.
f) School Fee Loan

This is a loan granted to a member to pay for primary and secondary school fees only.

    1. Maximum Amount: Ksh. 300,000.00.
    2. Repayment period: 12 Months.
    3. Interest charged: 1% per month on a reducing balance.
    4. Loans security accepted: guarantors.
    5. Disbursement: Within 5 days from the time of approval.
    6. Qualifications: only one school fee loan at any given time.
    7. Proof of school fees: The fee structure.
2.0 Front Office Service Activities (FOSA).

All members of the Wana-Anga SACCO LTD will be required to have FOSA Account through which all loans and refunds will be processed.

2.1 FOSA Products.
The following products are available in FOSA

      1. Front Office Loan.
      2. College fee Loan.
      3. Silver Loan.
      4. Karibu Loan.
      5. Rudi Nyumbani Loan.
      6. WANA -PAP Loan.
1) Front Office Loan
      1. Maximum Amount: 10 times the member’s deposits.
      2. Repayment period: 84 Months.
      3. Interest charged: 16.5% per annum on a straight line.
      4. Loans security accepted: guarantors, collateral.
      5. Disbursement: Within 48 hours from the date of approval.
      6. Qualifications: A member qualifies for up to ten (10) loans at any given time.
2) College Fee Loan

Caters for college and university fees.

      1. Maximum Amount: Ksh. 1,000,000.00.
      2. Repayment period: 36 Months.
      3. Interest charged: 16.5% per annum on a straight line.
      4. Loans security accepted: guarantors, collateral.
      5. Disbursement: Within seven (7) working days from the date of approval.
      6. Qualifications: A member qualifies for up to one loan at any given.
      7. Documentation: Fees structure as proof of evidence.
3) Silver Loan

This is a loan that is granted to members with the following requirements.

      1. Maximum Amount: 6 times members share deposit.
      2. Repayment period: 84 Months.
      3. Interest charged: 16.8% per annum on a straight line.
      4. Loans security accepted: guarantors, collateral.
      5. Disbursement: Within seven (7) working days from the date of approval.
      6. Qualifications: A member qualifies for up to one loan at any given.
3) Karibu Loan

This loan may be granted to new check off member to boost his/her shares/deposits only. To qualify for this loan, you need to have 3 months of active membership.
The loan has the following features:

  1. Maximum Amount: Ksh. 200,000.00.
  2. Repayment period: 24 Months.
  3. Interest charged: 16.5% per annum on a straight line.
  4. Loans security accepted: Guarantors, collateral (Title deed).
  5. Disbursement: Within twenty-four (24) hours from the time of approval.
  6. Qualifications: A member qualifies for up to one loan at any given time.
  7. Share account: 30% of the amount credited to shares/deposits account.
4) Rudi Nyumbani.

This loan is granted to members to clear outstanding loans with other financial institutions.

      1. Maximum Amount: amount outstanding in the other financial institution.
      2. Repayment period: 84 Months.
      3. Interest charged: 16.8% per annum on a straight line.
      4. Loans security accepted: guarantors, collateral.
      5. Disbursement: Direct to the financial institution on approval.
      6. Qualifications: A member qualifies for up to one loan at any given time.
      7. Documentation: Loan statement from the other institution.
5) WANA-PAP.

This mobile loan facility allows members to access affordable instant mobile loans through our USSD and Mobile App to meet their personal and emergency needs.

      1. Maximum Amount: Ksh. 20,000.00 and a minimum of Ksh,100.00.
      2. Repayment period: 1 Months.
      3. Interest charged: 0.25% per day.
      4. Loans security accepted: Self guarantee.
      5. Disbursement: Instant via MPESA from the system approval time.
      6. Qualifications: Member Registered with M-Sacco (Mobile banking platform).
2.0 LOAN ELIGIBILITY

A member of Wana-Anga SACCO Society may be eligible for a loan only if the member:-

      1. Must be above 18 years of age, be of sound mind and is an active member of Wana-Anga SACCO Society.
      2. Must be an active member of the Sacco with regular deposits contributions for at least six (6) months except for KARIBU Loan product.
      3. Must have paid (or is paying) the minimum share capital of Ksh. 25,000.00 or as may be determined by the AGM from time to time.
      4. Must have a regular source of income to support loan repayment (salary, business, etc.)
      5. Must provide security for the loan applied for such as guarantors, or collateral (land title deed) or both.
      6. Must have good credit history.
      7. For the check off members,
        i. A 1/3 rule shall apply as per the labor regulation.
        ii. Provide two most current pay slips certified by the employer.
        iii. Security (Guarantors and Collateral).
      8. For non-check off members
        i. Provide two months’ bank statement certified by the bank.
        ii. Provide certified copy of the National Identity card.
        iii. Security (Guarantors and Collateral).
3.0 LOAN APPLICATION
      1. Any loan request must be made on a freely available standard loan application form provided by the society, or through online loan applications platform. (The loan application forms are physically available at the SACCO offices or downloadable here).
      2. The loan application shall indicate;
        i. The amount applied for.
        ii. The purpose of the loan.
        iii. Terms of repayment.
        iv. Type of security provided.
        v. Guarantors, loans, deposits, ID number, phone numbers and email.
        vi. Preferred disbursement method.
      3. The loan application form must be fully completed and supported by relevant supporting documents that shall include;
        i. For check-off Member: Attach two (2) payslips for the current month and a preceding month, supporting documents (copy of the ID, PIN certificate) and loan security (Guarantors, Collateral or both).
        ii. For non-check off member: Provide proof of regular income (6 months’ bank statement or3 months M-Pesa statement), Bank standing order, Copy of the National identity card (Both front and back) or a passport, loan security (Guarantor, Collateral or both).
      4. By submitting a fully filled loan application form, a member agrees that all the information provided is accurate and complete to the best of his/her knowledge.
3.1 COMMISSION AND LOAN CHARGES

Each loan that is processed will attract the following initial charges:

      1. One percent (1%) interest to boost member’s deposits.
      2. The insurance charge calculated at the rate determined by the Board form time to time and applied on the entire amount of loan granted.
      3. Loan processing fee calculated at the rate determined by the Board from time to time and applied on the total loan granted.
      4. Any other commission and fees that may be charged based on the facility type as may be determined ny the Board from time to time.
4.0 LOAN APPROVAL
      1. At least two thirds of the Credit Committee shall meet to review loans approved by the Management staff as per specified limits as well as security and consider other loan applications.
      2. The approval of a member’s loan shall depend upon the evaluation and assessment conducted by the credit team of the Sacco.
      3. Loan approval are not guaranteed but are based on the member’s eligibility and creditworthiness.
      4. When all conditions for approval have been satisfied, a loan will be approved by a majority decision of the Credit Committee.
      5. Applicants will receive prompt notification of the outcome of their loan application, within a maximum of 14 days. The notification will include the decision made and in case of a rejection, the basis behind it.
      6. The Credit team may at any time during approval, request for more information or an interview with the member to satisfy their need to be assured that the application is fully compliant to this policy.
5.0 LOAN POLICY

All loans shall be granted in accordance with the Loaning Policy and procedures to ensure that members efficiently get their loans and to facilitate and improve loan recoveries to assist members. The loaning policy is subject to review by the AGM from time to time.

a) WANAANGA SACCO may grant loans to members in the register.

b) The repayment period, borrowing power, and rate of interest on loans shall be proposed by the board of management of the society and approved by the AGM.

c) No loan shall be granted to a member who has no ability to pay in accordance to the ACT and these by-laws.

d) All loans shall be applied for on prescribed forms.

e) The loan application shall be signed by the member and in each shall set forth the amount applied for, the repayment the security, if any and such other information as the credit/front committee or loans officer may require. All applications for loans and the report of the credit/front committee or loans officer thereof shall be filled as a permanent record of the society.

f) Loan applications shall be considered by the credit/front committee in the order in which the applications are made unless the loan is deemed by the committee to be an emergency loan.

g) The credit/front/board of management may summon or cause an applicant to be summoned to appear personally to be interviewed in respect of his/ her application for a loan, to determine the members’ ability to repay the loan.

h) The loan application form shall clearly state the amount of the loan, the rate of interest, the terms of repayment, and the security if any.

i) All loans shall be approved by the credit/front committee and ratified by the board of management

j) For members being considered for a loan, his shares, savings, deposits, and any security approved by the board of management may be taken into account.

k) The board of management may draw further regulations in respect to granting of loans provided such a regulation shall not come into force until approved by a general meeting.

l) No loan or credit facility shall be granted to a member where the loan or credit facility, in the aggregate, exceeds such a limit of the society’s core capital.

m) All loans granted must be subjected to an insurance fee as may be determined by the Board.

5.1 SECURITY FOR LOANS
  1. Unless the loan applied for and its interest is equal to or less than the member’s deposits, guarantors or other acceptable collaterals must secure it.
  2. The total amount of loan applied for must be fully guaranteed and secured through;
    i) Guarantors: – who shall all be active members of Wana-Anga SACCO
    ii) Collateral: -This shall be used as per the Collateral Policy
    iii) Self-guarantee: If loan amount is within untied member’s deposits.
    iv) Fixed Deposit: If a member has a fixed deposit facility with the SACCO.
  3. The total share deposits of the borrower and those of the guarantor(s) must be
    equal to or more than the loan plus interest applied for.
  4. All guarantors must be members of Wana-Anga SACCO society and no member shall be allowed to guarantee more than his/her total share deposits.
  5. Unless allowed by the Credit Committee through appraisal, no member shall be allowed to guarantee more than twenty (20) loans at any given time.
  6. Total individual guarantee shall not exceed 10 times their deposit or as may be determined by the board from time to time.
  7. An insider member of Wana-Anga SACCO shall NOT act as a guarantor of any person with respect to a loan facility applied.
  8. The society shall maintain a record of all guarantors to every loan in each member’s personal file.
  9. The obligations of the guarantors shall cease upon clearance of the loan and interest or upon replacement of the guarantor.
5.2 REPAYMENT OF LOANS
  • A borrower may, on any day on which the society is open for business, repay his loan in whole or in part before maturity.
  • The board of management may in the most exceptional circumstances agree to the refinancing of a loan balance or any request for an extension of time in which to pay. Any extension so granted shall be treated as though it was a new loan and an extension agreement shall be executed.
  • For any delinquent loan, the board of management shall attach the guarantee(s). The amount in default shall be recovered from the guarantor’s salary, deposits, savings, terminal savings, terminal benefits, and any other securities.
  • If the employer will not have remitted the deductions within the first 7 days of every month the board of management shall refer the matter to the commissioner.

Any loan more than four months overdue may be referred to the Co-operative Tribunal as a dispute.

5.3 LOAN DEFAULTING

A member shall be considered a loan defaulter if his/her regular repayment has ceased.

  • The society at its discretion shall forward details of the defaulter to debt collectors, credit reference bureau or pursue recovery through small claims court among other options.
  • The society shall inform the defaulter in writing with a copy to the parties involved.
  • The society shall attach the salary, terminal benefits and any other security for the loanee and the guarantor where applicable and necessary.
  • Any member or an employee of the society who tampers with his/her monthly shares contribution and loan repayments is liable to a disciplinary action to be determined by the Board.
  • In case of any default in payment, the entire loan balance will immediately become due and payable at the discretion of the society.
  • All shares and deposits owned by the member plus any interest and deposits due to the member will be set against the owed amount.
  • The member will be liable for any costs incurred in the collection of the loan balance and accumulated interest. Any remaining balance will be deducted from guarantors or terminal benefits where applicable.