Rotating Saving and Credit Association (Rosca)
Rotating Saving and Credit Association (Rosca)
Association
(ROSCA)
• The management committee serves for a term of one to two cycles unless
otherwise.
• Dividends are paid according to how much savings each person has. A
person who has more savings gets a bigger dividend.
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• They should be willing to attend meetings regularly, save, and abide by the
ROSCA rules.
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.
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.
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!!!