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Savings and credit co-operatives (Saccos) are come under the increasing public survey of late, mostly on charges of loss of funds of members. Let’s first need to understand Saccos; and to do that, we have to start with the movement of the co-operatives. Co-operatives are described as independent federations of persons are grouped with an intention to reach their common economic, social, and cultural requirements and aspirations through a jointly-owned and controlled enterprise. Saccos provide financial services aims at the provision of credit facilities and mobilization of funds to its members who are the users and owners. These days Sacco’s are becoming the best places to secure your money and take loans in India.
Saccos are one of the most main and frequently visible types of cooperatives. Their differentiating and distinctive character trait from other types of cooperatives is objective and aim for which they are incorporated, which is to perform the transaction of the business of mobilization of savings, and advancement of facilities of credit to their members. The part and parcel of the financial services sector are provisions of savings and credit facilities and consequently, Saccos are also frequently called financial cooperatives.
Normally, Sacco’s are differentiated into two segments: deposit-taking and non-deposit-taking. Both segments from the members mobilize savings deposits, which are used as collateral for the intention of advancing loans to members.
The deposit-taking SACCOs are the first segment of the SACCO (DT-SACCOs), and the second segment of the SACCO are the non-deposit-taking SACCOs (non-DT-SACCOs). The DT-SACCOs take deposits and thus provide withdrawable savings accounts services that are related to those provided by banks. They also provide front office services where members can visit their banking halls as they withdraw or deposit the money into their accounts.
On the other hand, the non-DT-SACCO segment is mobilizing savings from their members; these savings are purely used as collateral for advanced facilities of credit to such members. The members are not able to withdraw these deposits, but they can be only refunded when the member comes out from the Sacco. The non-deposit-taking Saccos do not provide front office services as members do not manage the accounts where they deposit or withdraw money.
Deposit-taking Saccos are authorized and regulated by SASRA (Sacco Societies Regulatory Authority). Besides the basic saving and credit products, they also offer basic banking services that are; requested for deposits, offers payment services and some even provide ATMs. These deposit-taking Saccos are had access to give easy to withdraw savings account (banking) services, through front office savings activities.
These days, deposit-taking Saccos are more famous than they were in the past because they offer a relatively high rate of interest on savings as compared to commercial banks. It is very important to note that the major difference between depository institutions and non-depository institutions lies in their demand from members for deposits. Deposit-taking Saccos needs you to open a savings account and deposit the money that you can easily withdraw same as what commercial banks do. But, non-deposit-taking Saccos, needs you to buy shares into the Sacco and become a member and save your money – but you are not able to withdraw the money unless you are come out from the Sacco. The only way to get access for the funds here is through loans.
Another difference is deposit-taking Saccos are managed by the Sacco Societies Regulatory Authority (SASRA), while the non-deposit-taking segment will come under the management of the Department of Co-operatives Development.
When selecting a Sacco, you may go for either deposit-taking or non-deposit taking. Whilst the non-deposit-taking Saccos are pretty straightforward; do your research and get to know all the information before you join a deposit-taking Sacco. First of all, make sure that you place your money with a credible and completely authorized deposit-taking organization. You should be careful of unauthorized deposit-taking entities and Ponzi/pyramid schemes. Such entities attract the members of the public to deposit the money with them and they promise quick and abnormally high returns on their money or acquisition of non-existent properties. Avoid keeping your money with such unauthorized entities. The deposit-taking Saccos (DT-Saccos) have continuously grown in membership, assets, revenue, and dividends to shareholders. This growth has had an overall positive economic impression on the individual members of these Saccos and in general the national economy. This, therefore, calls on all of us to motivate and support the deposit-taking Saccos in their business.
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