How to make guarantor system work for saccos
Wednesday December 08 2021 By PETER NJUGUNA
More by this Author
- Good prudential practice dictates that Saccos secure every loan taken out by its members, which means the decision on loan security is a business or operational decision more than it is a legal one.
- There have been several policy developments in the credit market in Kenya, enabling lenders, including Saccos, to use additional collateral besides guarantors.
Isn’t this script familiar? You and your colleague belong to Sacco X. Your colleague is in dire need of a loan, but he needs a few of his ‘friends’ to guarantee this loan for him. You as ‘a friend’ are approached to sign off the guarantor documents or form and you gladly do so.
A few monthly repayments later, your colleague is laid off and as a result,…