Fixed Deposit for Minor Child in SBI

A fixed deposit or FD is a savings and investment instrument that lets you grow your money safely and securely. Fixed deposit accounts can be opened for both adults and minors. But how is an FD helpful for a minor child? Educating a child today requires significant funds for which you must make smart investment decisions. You would prefer low-risk investments with a lot of volatility in your investments. For that, an FD for your child could be the best investment instrument.

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SBI provides multiple child plan FDs to choose from, depending on your investment style. These FD plans include SBI Flexi Deposit, Special Term Deposit, Annuity Deposit Scheme, Multi Option Deposit.

SBI Flexi Deposit

The Flexi Deposit offered by SBI works like a recurring deposit giving its customers the option to invest a minimum of ₹500 per month or ₹5,000 per year. The customers also have the flexibility to choose increasing the deposit amount during each instalment. 

Besides, they can also increase or decrease the number of instalments. The bank however limits the amount to Rs 50,000 that you can deposit in a year.

  1. Features and Benefits

    The features and benefits of investing in the SBI Flexi Deposit are:

    • Minimum tenure - 5 years

    • Maximum tenure - 7 years

    • Minimum investment - Rs 500 per month or Rs 5,000 per pear

    • Limit of investment - Rs 50,000 per year

    • Can be opened jointly or singly

    • No limit on the number of instalments

    • Nomination feature is available

    • A penalty of Rs 50 per financial year will be applied if you default in payment of the minimum deposit amount.

    • You can also get a loan of 90% of the principal deposit.

    • It helps the depositors invest for the long-term and earn an attractive interest rate and flexibility in choosing the deposit amount.

    • The interest rate for senior citizens (age above 60 years) is 0.50% more than the applicable interest rate.

    • The interest rate for SBI staff and SBI pensioners is 1.00% more than the applicable interest rate.

    • You can transfer your FD account among other branches of SBI.

  2. Eligibility

    The eligibility criteria to invest in SBI Flexi Deposit are:

    • Must be an Indian resident

    • Minors are eligible

  3. Documents Required 

    A valid identity proof and address proof is required to open an SBI Flexi Deposit account, such as:

    • Aadhaar Card / Driving License

    • Passport

    • Permanent Account Number Card (PAN)

    • NREGA Card

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Special Term Deposit

The Special Term Deposit is a variation of the regular term deposit. With a regular term deposit, you get your interest at a regular frequency throughout the FD tenure. With the Special Term Deposit scheme, you get all your interests at the time of maturity. 

The Special Term Deposit adds your regular interests to your principal amount and compounds your money throughout the FD tenure.

  1. Features and Benefits

    The features and benefits of investing in the SBI Special Term Deposit are:

    • Minimum tenure - 6 months

    • Maximum tenure - 10 years

    • Minimum deposit - Rs 1000 (multiples of Rs 100 beyond it)

    • Nomination feature is available

    • No cap on maximum deposit limit

    • If you deposit ₹2 crores or more, it will be treated as a bulk deposit.

    • The interest received by the depositor is compounded quarterly and will be paid at the time of maturity.

    • You can transfer your FD account among other branches of SBI.

    • You can get a loan against your deposited money, but margins are applicable. For example, if the residual tenure of the deposit on the date of availing the loan is 36 months, then the margin is 5%. For more than 36 and up to 60 months, the margin is 10%, and for more than 60 months, the margin is 15%. 

  2. Eligibility

    The eligibility criteria to invest in Special Term Deposit are:

    • Must be an Indian resident

    • Minors are eligible

  3. Documents Required

    A valid identity proof and address proof is required to open a Special Term Deposit account such as: 

    • Aadhaar Card / Driving License

    • Passport

    • Permanent Account Number Card (PAN)

    • NREGA Card

Annuity Deposit Scheme

The SBI Annuity Deposit Scheme provides the depositor with a monthly income. The depositor has to make a lump sum deposit. After this, a fixed sum will be decided wherein the depositor receives that in the form of monthly instalments. This instalment will include the principal amount and earned interest. 

  1. Features and Benefits

    The features and benefits of investing in the SBI Annuity Deposit Scheme are:

    • Premature payments are allowed only for deposits up to Rs 15 lakhs. 

    • Penalty can be applied to term deposits. In case of the death of the depositor, premature payment is allowed without any limit.

    • No maximum deposit limit

    • Nomination feature is available

    • Minimum deposit amount is Rs 1000, which is based on a minimum monthly annuity for the relevant period.

    • The interest rate for this plan is the same as term deposits.

    • The interest rate for SBI staff and SBI pensioners is 1.00% more than the applicable interest rate.

    • The interest rate for senior citizens (age above 60 years) is the same as the interest rate of term deposits.

    • You can transfer your FD account among other branches of SBI.

    • The date for monthly instalments will be the anniversary date of the month following the month of deposit. And in case the date doesn't exist, for example, 29th, 30th, or 31st, then it will be paid on the first date of the coming month. 

    • Loans up to 75% of the balance amount of annuity may be granted in special situations.

    • The period of deposits can be 36 or 60 or 84 or 120 months.

    • This can be opened jointly or singly.

  2. Eligibility

    The eligibility criteria to invest in SBI Annuity Deposit are:

    • Must be an Indian resident

    • Minors are eligible

  3. Documents Required

    A valid identity proof and address proof is required to open an SBI Annuity Deposit account, such as: 

    • Aadhaar Card / Driving License

    • Passport

    • Permanent Account Number Card (PAN)

    • NREGA Card

Multi Option Deposit

SBI Multi Option Deposit Scheme or MODS provides you with a service that you usually don't get with a regular FD without paying penalties. The regular FDs do not let you withdraw money before maturity without paying the penalty. 

With MODS, your term deposit is linked with your savings or current account wherein you can withdraw money in multiples of ₹1000. The rest of the balance will continue to earn interest.

  1. Features and Benefit

    The features and benefits of investing in the SBI Multi Option Deposit Scheme or MODS are:

    • MODS offers two types of accounts: term deposit and special term deposit

    • Minimum deposit period - 1 year

    • Maximum deposit period - 5 years

    • Does not have any maximum deposit limit

    • Nomination feature is available

    • Minimum deposit of Rs 10,000 (multiple of Rs 1,000 beyond it)

    • The rate of interest for the MOD scheme is the same as term deposit rates.

    • Taxes are deducted at the source if the interest earned on the deposit money is more than ₹10,000 during the financial year.

    • You can get a loan against the money that you have deposited with the MOD scheme.

    • You can transfer your FD account among other branches of SBI.

    • This can be opened jointly or singly.

    • The interest rate for SBI staff and SBI pensioners is 1.00% more than the applicable interest rate.

    • Premature closure is also available where you can fully liquidate your funds.

  2. Eligibility

    The eligibility criteria to invest in SBI Multi Option Deposit Scheme are:

    • Must be an Indian resident

    • Minors are eligible

    • Karta of HUF

    • Private Firms 

    • Local bodies and government departments

  3. Documents Required

    A valid identity proof and address proof is required to open an SBI MOD account, such as: 

    • Aadhaar Card / Driving License

    • Passport

    • Permanent Account Number Card (PAN)

    • NREGA Card

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In Conclusion

SBI can provide you with multiple FD schemes to choose your adequate plan. These plans can help you save money for your child’s higher education. However, you must consult the bank or conduct a thorough research to know additional terms and conditions.

FAQ's

  • Can I withdraw my money in an FD before maturity?

    Yes. But you may have to pay a penalty for it.
  • How frequently will I receive interest from my FD?

    The frequency of interest payout depends on the type of plan you have chosen. If it is a reinvestment plan, then you will receive all your interest at the time of maturity. If it is a regular plan, then payouts can be monthly, quarterly, depending on the customer’s choice.
  • Can I invest in an FD online?

    Yes, you can invest in an FD online. If you are an SBI account holder, then you can open an FD account using the net banking platform.
  • Do senior citizens get more interest rates than non-senior citizens?

    Yes, senior citizens get a 0.50% extra interest rate.
  • What is a reinvestment plan?

    In an FD reinvestment plan, your interests are compounded quarterly with your deposited amount.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
#The lumpsum benefit is calculated if policyholder invested ₹10000 monthly for 10 years in the fund with a policy term of 20 years. This Point To Point past performance data of last 10 years has been used to illustrate a scenario for the customers benefit. It is assumed that the past 10 years returns would have also been delivered in last 20 years. This is not guaranteed and not in anyway indicative of what the customer may actually get 20 years from now. The investment is subject to market risk and the risk is borne by the policyholder.
+Returns Since Inception of LIC Growth Fund
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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