April 1, 2025
REF: BALOZI SACCO PRODUCT REFORMS
Following the members’ suggestions through different channels, SACCO’s Board of Directors is pleased to announce the following product reforms.
1. Bridging fee
The bridging fee has been reviewed downwards from 5% to 4% and members will cater for excise duty charged on the bridging fees.
2. Jointly and severally clauses in guarantorship
In the event of loan default, guarantors will pay the liability of the defaulted loan upto the
extent of the amount they guaranteed.
3. Spousal guarantorship
The SACCO will allow spouses to guarantee each other within their free deposits.
4. Self-guarantee loan
The SACCO has introduced a new product for members without loans but have free deposits. The product details are:
- Product Name: Self guaranteed loan.
- Interest rate: 0.958% per month on reducing balance.
- Maximum amount: 90% of member’s free deposit.
- Repayment period: 36 months.
- Eligibility: two thirds of the income rules apply.
5. Loan multiplier
The loan multiplier has been reduced from four to three times of a member’s deposits.
6. Guarantorship multiplier
To reduce the risk of exposure on guarantorship, the eligibility of the guarantorship has been reduced from four times (X4) to two times (X2) of a member’s deposits for all loan products.
7. Collateral loan:
The collateral loan will have the following features:
- The loan repayment period will be 10 years.
- The interest rate is 1.125% per month on reducing balance.
- Agricultural land will not be accepted as a security for loans.
- Commercial land will be accepted as security for up to 80% of its mortgage/forced value.
- The loan can be used for amalgamating other loans.
- Eligibility is upto a maximum of five times (X 5) of a member’s deposits.
8. Special loan
The SACCO has replaced the current special loans with a new loan product with the following features:
- The repayment period will be 10 years (120 months).
- The interest rate is 1.29% per month on reducing balance.
- Eligibility is three times (X 3) of a member’s deposits subject to two third income rules
- Can be bridged.
- Can be used for amalgamating other loans.
9. Share capital
New members will be allowed to gradually build their share capital of KES 50,000 within 3 years. The cumulated minimum amount expected per new member per year will be:
- Year 1 - KES. 17,000
- Year 2 - KES. 17,000
- Year 3 - KES. 16,000
Members are encouraged to contribute at least KES. 1,500/- per month. The share capital built up will be monitored monthly. Any arrears will be recovered from loans being granted or dividend/interest due to the member but on a prorated basis.
Illustration
A member who is 9 months old in the SACCO and has no share capital when applying for loan of KES 100,000 will have share capital arrears for the 9 months (KES 1500 *9) deducted. The member will take home only KES 86,500 i.e. (KES 100,000 – KES 13,500).
10. Loan rescheduling
The SACCO will allow members who wish to reschedule their loans after making lumpsum payment to do so.
Example
A member with a loan product repayable for 3 years may make a lumpsum payment in the 2nd year. This member may choose to reduce his/her instalment repayment so long as the loan is fully within the remaining period of the 3 years.
NOTE: All other terms and conditions for loan applications apply.
Effective date for changes: April 3, 2025
Yours faithfully,
Jorim Oyago
Chief Executive Officer
