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Supervision

The Registrar conducts ongoing supervision of financial cooperatives to ensure safety and soundness, promote confidence and integrity of the financial cooperatives sector. Ongoing supervision is conducted through off-site surveillance and on-site examinations aimed at early identification of elevated risks and non-compliance. SACCOs submit statutory returns through Bank Supervision Application.

Appropriate enforcement action is taken in the event of non-compliance and other adverse developments. The supervisory approach for financial cooperatives is compliance based.

Ongoing supervision is conducted through off-site surveillance and on-site examinations. The supervisory approach is risk based which entails allocating supervisory resources to areas of high risks.

Off-site surveillance of financial cooperatives involves monthly reviews and analysis of statutory returns to evaluate financial condition and performance of the SACCOs.

On-site examination of financial cooperatives involves:

  1. assessing the level of risks inherent to financial cooperatives;
  2. evaluating effectiveness of risk management system and internal controls in identification, measurement, monitoring, and controlling of risks inherent financial cooperatives;
  3. determination of residual risks faced by financial cooperatives; and
  4. assessing the financial cooperatives’ compliance with financial service laws.

Types of on-site examinations include:

  1. routine examination: carried out for every licensee as per examination planning cycle which may be full scope - covering all risk areas of supervisory importance, or targeted on specific areas;
  2. ad hoc: triggered by an adverse event within the institution or market; or
  3. follow up: conducted to ascertain implementation of recommendations from a routine or ad hoc on-site examination.