Rotating Saving and Credit Association (Rosca)

Rotating Saving and Credit
Association
(ROSCA)
Rotating Savings and Credit Association (ROSCA) Features.
• The ROSCA runs in six-month cycles. Every twenty-four weeks the

management committee closes the cycle and divides up the bank’s profits
among the members in the form of dividends. Meetings are held once
every month.
• The members of the ROSCA to elect a management committee.
• The management committee serves for a term of one to two cycles unless
otherwise.
• All financial transactions, such as collection of savings and disbursal of

loans, are done at the ROSCA meetings, in front of the entire group.
• The management committee keeps detailed records of every financial

transaction. That way everyone knows where every bit of the bank’s
money is at any time.
• Regular mandatory monthly savings will be done in terms of shares.

𝟏 𝒔𝒉𝒂𝒓𝒆 = 𝑲𝟓𝟎𝟎. 𝟎𝟎. A member can have more than 1 share.
• Dividends are paid according to how much savings each person has. A
person who has more savings gets a bigger dividend.
• A onetime minimum contribution of 𝑲𝟏𝟎𝟎. 𝟎𝟎 might be requested at

initiation of the program. This money while be used for purchases and
carrying out every necessary activity that might be arise
• Members of a village bank should be at least 18 years old, be honest and

trustworthy, and they should be residents of the community.
• They should agree to avoid gossiping and backbiting or bringing politics

into the ROSCA meetings.
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• They should be willing to attend meetings regularly, save, and abide by the
ROSCA rules.
What about loans?

To be able to take a loan from the ROSCA you have to be a responsible member of the
group. Members who are in good standing have priority when it comes to getting
loans. To be in good standing, a member must attend ROSCA meetings and save
regularly, make her loan payments on time and abide by the ROSCA rules.
Here are some other special features about ROSCA loans:

ROSCA loans will be given at an initial interest rate of 𝟐𝟎% 𝒑𝒆𝒓 𝒎𝒐𝒏𝒕𝒉.
Failure to clear a ROSCA loans within a month period (before the next
meeting) will attract a 𝟏𝟎% increase of any loan balance.
ROSCA loans must not be more than 5 times bigger than a person’s total
savings.
In the last 2 months, no loan should be 3 times more than a person’s saving.
One can only get a loan equivalent to his/her savings in the 4th and 5th month.
Before taking a loan a request must be presented to the group. The group will
determine if the size of the loan is appropriate. NO ROSCA LOAN WILL
BE GIVEN IN SECRET.
ROSCA loans should not be passed on to other family members. A person

who passes her loan on to others will be responsible for paying it back.
Before taking a ROSCA loans, one must sign a debtor’s agreement, which is a
piece of paper acknowledging his/her debt and promising to repay his/her loan.
One 𝑚𝑖𝑔ℎ𝑡 also sign a personal collateral form on which they promise to hand
over something of value to the ROSCA team if they do not repay their loan on
time.
ROSCA RULES
In order to ensure good discipline, rules that the members all agree to abide by must
be followed strictly. Hence fines might be imposed on people who break the rules.
Here are some of the rules that you will find in most village banks:
1. People who miss a bank meeting without a good excuse or without sending
advance notice to the secretary must pay a K20.00 fine.
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2. If anyone is more than 30 minutes late to a ROSCA meeting she must pay a
K10.00 fine.
3. If anyone fails to bring or send her mandatory savings to the ROSCA meeting
she has to pay a K50.00 fine.
4. The chairperson reads out the names of all the borrowers who are behind in
their loan payments.
5. If a loan is not fully repaid by the due date, the ROSCA may use the person’s
savings to pay off as much of the loan as possible. If his/her savings are not
sufficient she must turn her personal collateral over to the ROSCA treasurer.
6. If a person cannot fully repay her loan by the due date because of some
misfortune, the ROSCA may decide to give him/her extra time to pay without
penalty. This is called ― rescheduling a loan.
7. If a PERSON has a big loss due to some misfortune, but s/he is a member in
good standing, the ROSCA may decide to give her an additional loan to pay
back her first loan and re-establish her business. This is called ―refinancing a
loan
8. Since dividends are based on how much savings a person has, if a member has
to use his/her savings to pay off her loan s/he may not get a dividend.
9. Any ROSCA officer who misuses the ROSCA’s money must repay the money
and should be removed from his/her office.
10. Any member who abuses the bank or acts irresponsibly can be kicked out.
11. All banking transactions should be made during the ROSCA meeting in front
of the whole group.
12. Only members of the management committee may authorize or pay

administrative expenses for the village bank. These must be reasonable and
receipts should be gotten whenever possible.
13. Only the treasurer handles cash during the meeting. If any cash is missing she
is responsible and must make up the difference herself.
Members must appreciate the rules and the need to pay fines, because the rules protect
their money and the fines go into their group fund. Members that consistently miss
meetings, break the rules or do not pay their loans back on time may have to wait
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longer to get a loan, or they may get smaller loans. If they persist they might be asked
to leave the ROSCA.
Thank you for your time! Please make sure you read through
everything, this draft is open for discussion and not a final
copy, any addition or subtraction will be rendered useful.
Thank you once again!!!

Rotating Saving and Credit Association (Rosca)

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Rotating Saving and Credit

Rotating Savings and Credit Association (ROSCA) Features.

• The ROSCA runs in six-month cycles. Every twenty-four weeks the

• The members of the ROSCA to elect a management committee.

• All financial transactions, such as collection of savings and disbursal of

• The management committee keeps detailed records of every financial

• Regular mandatory monthly savings will be done in terms of shares.

• A onetime minimum contribution of 𝑲𝟏𝟎𝟎. 𝟎𝟎 might be requested at

• Members of a village bank should be at least 18 years old, be honest and

• They should agree to avoid gossiping and backbiting or bringing politics

What about loans?

Here are some other special features about ROSCA loans:

ROSCA loans should not be passed on to other family members. A person

12. Only members of the management committee may authorize or pay

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