When we speak of investments, it is generally advised that one should invest a part of their disposable income in a monthly or quarterly interest payment scheme through which they can receive a steady income. India’s largest public sector bank, which is the State Bank of India (SBI) has been offering its Annuity Deposit Scheme wherein the depositor can get a monthly amount after they deposit a one-time lump-sum. According to the details available on the website of the bank, the depositor needs to pay a one-time lump-sum amount to receive the same in Equated Monthly Instalments (EMIs).
This monthly amount comprises a part of the principal amount as well as interest on the reducing principal amount. The interest is compounded quarterly and discounted each month.
Here’s what you need to know about this scheme from SBI:
Investors of the SBI Annuity Deposit Scheme have to choose from a period of deposit from 36 months (3 years), 60 months (5 years), 84 months (7 years), or 120 months (10 years). The rate of interest on the investment will be the same that is applicable to term deposits.
For example, if you make a deposit for five years, then you get the interest according to the interest rate applicable for a fixed deposit (FD) of five years.
Currently, SBI offers a 5.40 per cent interest rate on retail domestic term deposits maturing in five to 10 years. For deposits having a maturity period of three to less than five years, the bank offers an interest rate of 5.30 per cent, according to details on SBI website.
After disbursal of OD/loan, further annuity payment is deposited in loan account only
Senior citizens aged 60 years and above will get 0.50 per cent above the applicable rate in the SBI Annuity Deposit Scheme, while the interest rate payable to SBI Staff and SBI pensioners will be 1 per cent above the applicable rate.
Who are eligible to open SBI Annuity Deposit Scheme?
Resident individuals, including minors, can open the SBI Annuity Deposit Scheme. The mode of holding can be single or joint.
What is the minimum deposit for SBI Annuity Deposit Scheme?
The amount for the SBI annuity deposit scheme is based on a minimum monthly annuity of Rs 1,000/- for the relevant period. In no case, the minimum amount of deposit should be below Rs 25,000 and there is no maximum limit for deposit.
Payment of annuity?
The payment of annuity is on the anniversary date of the month following the month of deposit. In case, the date is non-existent (29th, 30th & 31st), it will be paid on the 1st day of the next month. Investors should note that annuity payments will be subject to TDS on the interest amount. It will be credited to the linked savings bank (SB)/ current account (CA) account.
Other facilities from the scheme:
SBI offers a nomination facility with the Annuity Deposit Scheme. Apart from this, overdraft or loan up to 75 per cent of the balance amount of annuity can be granted on special cases. After disbursal of OD/loan, further annuity payment is deposited in loan account only. A universal passbook is issued by the lender and transferability among its branches are allowed.