EXAMPLE OF GUARANTORSHIP IN SACCO SOCIETIES

BY STEPHEN KIRITU MWANGI A CO-OPERATOR

1. Unless the loan applied for is equal to or less than a members shares, it must be secured by guarantor((s). The total shares of the borrower and those of the guarantor(s) must be equal to or more than the loan applied for.

2. a) No members will be allowed to guarantee more than three loans. All guarantors must be members of the Society. b) Members of the Management Committee and the Supervisory Committee shall not guarantee loans among themselves.

3. The obligations of the previous guarantors shall cease upon change of guarantors but subject to new guarantors being accepted by the Society. The obligation of the guarantors shall also cease when loans guaranteed have been reduced to or less than the members shares.

4. The Society shall maintain a record of all guarantors to every loan in each members personal file.

5. Where a member wishes to withdraw from the Societys membership, he/she may be required to give the Society a written notice of up to 60 days of his/her intention to withdraw.

6. No member shall be allowed to withdraw from the Society membership unless, the members loan is repaid in full or the loan balance can be fully offset by the members share. Such a member will also have to satisfy the Society that all loans guaranteed have been paid in full or the balance does not exceed the shares of the members whose loans were guaranteed.

7. A member who retires from the common bond, but retains his/her membership in he society shall be granted loan only up to the limit of his/her shares.

8. A member who withdraws due to retirement or resignation shall be required to clear all outstanding loans and provide alternative guarantors in cases of loans guaranteed before retirement or resignation. Where a member who is retiring or resigning is not able to clear immediately he/she will be required to make arrangement with the Society for repayments.

The Society shall be required to ensure that no loan is granted with repayment period going beyond the retirement/resignation date of a member if that is known.

9. Where a member is employed on contract, he/she should be granted a loan payable within his/her contractual period. However, in cases of emergency, loans may be granted provided that they are guaranteed by Societys members.

10. In case a loan is not repaid for a month, the society shall inform the loanee immediately in writing with a copy to each guarantor. If no repayment is effected during the second month the guarantors shall be informed of this fact and be notified that they shall be called upon to honour their obligations if no repayments are effected at the end of the third consecutive months. However, the society will still maintain efforts to recover the defaulted loan from the loanee.

11. Where a guarantor has filed for bankruptcy/is bankrupt, the applicant should seek alternative guarantors immediately.

THANK YOU