SBI Child Plan Fixed Deposit

The SBI Child Plan Fixed Deposit is a scheme that offers risk-free investment options to secure the financial future of young ones. The schemes offer a decent return with varying interest rates depending on the duration of the account. The total accumulated sum can be used towards the benefit of a child’s education, among other needs. 

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What Is SBI Child Plan Fixed Deposit?

The SBI child plan fixed deposit caters to the needs of children. Parents who desire to secure their children financially can opt for this fixed deposit scheme to compound their money in a low-risk environment. The bank issues the interest rate in line with the Reserve Bank of India. This type of fixed deposit for children is preferred because of its simplicity and risk-averse nature.

Parents can deposit an amount in this FD account to address their child’s milestones which includes education, marriage and entrepreneurship.

The SBI Term deposit scheme is another option available for children and young adults who are preparing for their future. The tenure of the scheme can be decided upon to align with a child’s needs. It is also flexible for women and children and comes with no lock-in period. This makes the scheme suitable as a long-term investment as well as an emergency fund.

Benefits of SBI Child Plan Fixed Deposits

The schemes offered by the SBI benefit all the investors irrespective of the age group and profession. The SBI FDs provide guaranteed returns to the depositor who looks to safeguard his future along with his family’s.

Some of the benefits of the SBI Child FDs are as follows:

  1. Generating interest

    The fixed deposit schemes offer a moderate to low return for the depositors. There are absolutely no risk factors. The SBI fixed deposits for children earn interest depending on the basis points decided by the Reserve Bank of India. The depositor's capital is compounded slowly and consistently by eliminating the risk factor. The returns are guaranteed and paid out at maturity along with the final sum.

  2. Financial Gains for the nominees and beneficiaries

    The SBI Fixed deposit schemes allow depositors to add nominees or beneficiaries who would gain from it in case of unfortunate events such as the depositor's death. The nominees can claim the deposited sum and stay protected during uncertain times. The depositor can nominate their spouse or children to enjoy the added protection provided by the scheme.

  3. Reasonable Interest Rates

    The SBI Fixed deposits provide varying interest rates depending on the depositor's age, gender, and economic contribution. The SBI Child Plan Fixed Deposit offers one of the best interest rates for children, teenagers and minors. The investors can benefit from such schemes as these help with wealth creation. You can use the SBI FD calculator to find out about the interest rate and your returns.

  4. Automated Features

    The SBI offers an automated facility to renew the deposit term. The depositor can opt for auto-renewal at the time of investing the capital in the bank. The invested capital on completion of its term will automatically be renewed for the next tenure. The investor can save time and effort by opting for the auto-renewal option.

  5. Tax Benefits

    The SBI FD schemes for children and senior citizens offer tax benefits where the capital gains below a specific limit are tax-free. However, investors should examine the tax benefits of other SBI FD plans before proceeding to invest in them.

How To Open an SBI Child Plan FD Account?

The SBI Child Plan FD can be opened in two ways. The first is an online method and the second is the traditional offline method. The procedure to open Child plan fixed deposit online is as follows.

  1. Online Method

    The pre-existing condition to open the online account is that the investor must access SBI internet banking with valid login credentials.

    The steps to open the SBI Child Plan FD account are as follows:

    • The investor must visit the authorized online domain of the SBI bank.

    • The depositor must enter the web page by using the appropriate credentials assigned to him by the bank. The depositor will be locked out if the incorrect credentials are used for login. The credentials usually include a username and alphanumeric password.

    • On entering the bank's home page, the investor needs to select "Fixed Deposit" on the menu bar at the top of the web page.

    • The investor needs to choose e-TDR/e-STDR under the sub-menu of the “Fixed deposit” tab.

    • The investor needs to choose the appropriate plan for the fixed deposit scheme. In this case, the investor needs to select e-TDR/e-STDR for the child plan. The investor must click "proceed" to be directed to the next page.

    • The investor can link the existing savings account or the current account to the chosen child plan fixed deposit scheme.

    • The linking of accounts makes it easier for the average investor to quickly transfer funds to the fixed deposit account without visiting the bank branch.

    • The bank also provides an option for elderly citizens who have chosen the fixed deposit schemes to avail better interest rates. The elderly investor can select the check box named" Senior Citizen" to get their benefits. These people can name their children or grandchildren as beneficiaries to receive the funds on their demise.

    • The investor must choose the basis on which he needs his interest rates to be received. He can choose between cumulative interest rates or non-cumulative interest rates according to his convenience.

    • The depositor must finalize the interest rates assigned to the specific plan. In this case, he must ensure the interest rate for the Child Plan Fixed deposit matches the one in the brochure of the bank.

    • The investor must also check the options related to the renewal of the plan, tenure, etc.

    • The investor can proceed to submit after ensuring that all the mandatory fields in the online form are completed.

  2. Offline Method

    The investor choosing the traditional approach can visit the nearest SBI bank branch and get in touch with the representatives. They will assist him/her in opening the FD account for his/her child. The investor must carry all the mandatory documents required for to open the account.

    The documents needed to open the Child Plan FD account are as follows:

    • Identity proof of the parent and the child such as passport, AADHAAR card, driving license, etc.

    • Address proof such as passport or utility bills such as electricity bills, water bills or a ration card, etc.

    • Documents related to age proof such as birth certificate, high school certificate, etc.

    • Passport size photographs along with those of the child

    • Bank account details such as the bank statement revealing the proof of transactions and banking activities of the account holder for authorization

The investor should note that the above list of documents may change as per the bank's requirement. Please contact the bank branch to get more information related to the FD products. Parents can also explore SBI Fixed Deposit For Girl Child such as the SBI Sukanya Samriddhi Yojana.

Conclusion

The fixed deposit schemes are suited for different types of investors with various motives. The SBI Child Plan FD caters to the needs of the children as they grow older and achieve important milestones. Investors with a less-risk appetite can opt for fixed deposit schemes as it is not as volatile as the investments made in the capital market.

This gives the investor peace of mind knowing that his investments are insulated from market fluctuations. If invested for a long duration, the Child Plan FD can provide steady returns to meet the child's future financial needs.

FAQ's

  • Q: Which category of investors gets the highest rate for SBI FDs?

    Ans: The SBI FDs are friendly towards the senior citizens and offer them a high interest rate of over 6%. It is usually around 5% for other investors.
  • Q: Is it possible for the depositors to change the tenure of the existing fixed deposit scheme?

    Ans: No, the investor cannot make any changes to the existing fixed deposit scheme until the maturity defined in the plan. The investor can alternatively choose a fresh investment plan with a feasible tenure.
  • Q: What is the meaning of “Loan against FD”?

    Ans: The investor can avail loan against the existing fixed deposit in the bank. The interest rate offered to the investor is between 5% and 7% for the availed loans.
  • Q: What is the repayment tenure of the loans availed against the FD?

    Ans: The repayment period of the loan depends on the maturity period of the fixed deposit chosen. If the maturity period of the FD is three years, then the loan repayment tenure is also three years. The interest rates for the loan availed are calculated accordingly.
  • Q: Are there any lock-in periods for SBI tax savings schemes?

    Ans: Yes, the SBI tax savings scheme comes with a five year lock-in period to enjoy the benefits of tax deductions.
  • Q: Are there any forms to be filled to avail of tax benefits?

    Ans: Yes, the investors who do not come under the category of senior citizens must fill the Form 15G mandatorily to avail of the benefits of tax deductions. The investor must remember that Form 15G is applicable only for investors with interest earnings less than Rs.40 000.
  • Q: Is there a penalty for SBI FD scheme if withdrawn prematurely?

    Ans: No, the penalty is only for specific SBI FD plans, while other plans do not penalize the investors for premature withdrawals. You should check with the bank for more details as these aspects can keep changing.
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