In 2019, the Central Bank of Kenya formulated regulations governing financial institutions, on how to deal with loan defaulters.
From these regulations, credit lenders are expected to give loan defaulters a 30-day-notice before submitting their details to the Credit Reference Bureau (CRB).
The financial institutions must also ensure that they have notified the defaulter using all means of communication accessible to by the debtor.
Being among the financial lenders, Savings and Credit Cooperative Societies have to follow this rules and regulations, to make sure that their members follow the right procedure in paying up their loans.
The societies have proved to be the right lenders when it comes to dealing with defaulters and CRB listings.
Many Sacco members who have defaulted loans for some time can attest to this; they go back to the payment drawing board without the fear of CRB.
Society board members and the management have been laying down strategies to enable members pay back non-performing loans without facing the troubles of CRB listing.
As observed among many societies, the Sacco management notifies defaulters of their loan, in a continuous process, up to a point the member comes back on board and start paying.
A society can keep on extending the notice period until a member starts paying the loan, which he or she had defaulted best on unavoidable circumstances.
Saccos, unlike banks, understands the needs, expectations and background of their members –which gives them patience in following up on defaulters. This gives members the moral of utilizing the Sacco products.
The board of management comes up with a credit recovery strategy, which has proved to be friendly, luring defaulters back to the board without the worry of being listed on CRB.
This explains why many savers have chosen to go the Sacco way.