Taqwa Sacco
Photo: Taqwa Sacco Official Facebook Page

Taqwa Sacco licensed to offer banking services

Taqwa Sacco, a sharia-compliant savings and credit co-operative society, is now licensed as a deposit-taking credit union by the Sacco Societies Regulatory Authority (Sasra).

The Sacco was founded in 1998 targeting Muslims seeking to join a members’ union. It hitherto only offered back office services, mainly check-off loans.

“The introduction of front office services (FOSA) will enhance efficiency in providing services to our members to meet their banking needs and additional financial services to complement products and services offered by the back office services,” said Taqwa chairman Ahmed Yusuf.

Taqwa Sacco had a loan book of Sh372 million and deposits worth Sh400 million as at end of December 2016, according to Dr Yusuf.

Unlike banking, Sasra does not issue special permits to sharia-compliant saccos. The other self-proclaimed Islamic saccos in Kenya are not deposit taking.

They include Crescent Takaful Sacco, partly-owned by Takaful Insurance of Africa, Barkah Sacco, and Isiolo-based Vuna Sacco.

Taqwa Sacco has a membership of 4,200 and will now roll out services such as salary processing, operating savings and current accounts, Automated Teller Machine (ATM) services, mobile banking and money transfer.

Dr Yusuf said the deposit-taking sacco wants to take advantage of the largely unbanked Muslim market which accounts for about a fifth of Kenya’s population.

Taqwa Sacco loan products do not attract interest, as Islamic law forbids charging interest on financial services. Sharia law also prohibits conventional financial practices such as speculation and gambling.

The sacco charges a fee for loan processing in place of interest— charged at a minimum of one per cent of the loan taken or Sh2,000 a month, whichever is bigger.

In case one wants to buy an asset such as land, the buyer identifies the plot, then the Sacco will do a markup and sell it to them.

Source: Business Daily