What is Interest Rebate (SACCO)?
An interest rebate, often just called interest on deposits, is the return a SACCO pays members on their accumulated deposits. Like the dividend it is declared at the annual general meeting out of surplus, but it applies to a different balance and is usually calculated at a different rate.
A real Kenyan example
A member holding modest share capital and substantial deposits receives most of their annual return through the rebate on deposits rather than through the dividend.
Why it matters
Members comparing SACCOs on a single advertised percentage are often comparing one SACCO's dividend against another's rebate, which is not a comparison at all. Ask which balance any quoted figure applies to.
FAQs
Is a rebate the same as interest on savings?
In practice the terms are used for the same thing: the return paid on member deposits. What matters is that it is a different distribution from the dividend on share capital.
How is a SACCO rebate calculated?
Methods vary between SACCOs, including whether it is calculated on the average balance over the year or on the closing balance. Ask your SACCO which method it uses, because it materially affects what a member who deposited late in the year receives.
Can a SACCO pay a rebate but no dividend?
Yes, and the reverse. Both are decisions of the annual general meeting out of available surplus, and they are made separately.