July5 , 2022

SBI Annuity Deposit Scheme: How to get monthly income on a single deposit?



In the face of rising interest rates, the country’s largest lender, State Bank of India (SBI), offers a scheme called SBI Annuity Deposit Scheme, which is nothing more than an investment product in which investors are required to park a lump sum deposit and can earn monthly annuity installments that include a portion of the principal amount as well as interest.

Eligibility required

All residents, including minors, are eligible to apply for the scheme through a single or joint method, according to SBI’s official website. Customers who are NRO or NRE are not eligible for this product, however, senior citizens are eligible for an additional rate of interest over the regular rate. According to SBI guidelines, one can apply for the SBI Annuity Scheme using savings, current, or OD account, and the account selected for the scheme must be a legitimate operational account with Internet Banking enabled and the account should not have been halted, dormant, or locked.

Maturity period and interest

The SBI Annuity Scheme is available at all SBI branches and comes with a tenure of 36, 60, 84, or 120 months. To establish an SBI Annuity Scheme with a maturity duration of 3 to 10 years, a minimum deposit amount for annuity deposit must be made, which is based on a minimum monthly annuity of Rs. 1000 for the applicable period. According to SBI guidelines, the maximum deposit limit through online banking would be the same as the maximum limit set for fund transfer within one’s own account but through offline mode, no maximum deposit limit is there. The interest rate provided on the SBI Annuity Deposit Scheme will be as applicable to term deposits of the term chosen by the account holder. On the SBI Annuity Scheme, the rate of interest applicable to SBI Term Deposits for the general public and senior citizens will be offered. SBI increased interest rates on fixed deposits on June 14, 2022. SBI currently offers an interest rate of 5.45 per cent to 5.50 per cent to the general public and 5.95 per cent to 6.30 per cent to senior citizens on deposits maturing in 3 to 10 years. TDS will be applied to the interest paid on the Annuity deposit and for this PAN is necessary to submit to avoid the TDS amount.

Premature withdrawal and overdraft facility

Premature closure is authorized in the event of the depositor’s death, and premature payment is permissible for deposits up to Rs. 15.00 lacs, according to SBI’s terms and conditions. Premature withdrawals are subject to the same premature penalty as term deposits. According to SBI’s current premature closure guidelines, for term deposits above 5.00 lacs, the applicable penalty will be 1% (all tenors) and 1% below the rate applicable at the time of deposit will be provided to the depositor as a premature withdrawal amount for the period of deposit remained with the bank. An overdraft/loan of up to 75% of the balance amount of the annuity can be issued for specific circumstances such as education, marriage, or any other emergency. According to SBI, annuity payments will be credited to the loan account only after the OD/loan has been disbursed.

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