SBI Fixed Deposit Monthly Income Scheme

Fixed deposits are the safest investment vehicles for Indian financial planners. You can open a fixed deposit account in any commercial bank or the Post Office without any deposit limit for 7 days to 10 years. In return, banks pay you interest for the investment period with compounding benefits. In addition, you can ask for interest payment periodically or on maturity, depending on the chosen scheme. However, SBI Fixed Deposit Monthly Income Scheme differs from the traditional FD Schemes.

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Let us take a closer look at its various elements.

SBI Annuity Deposit Scheme

The unique SBI Annuity Deposit Scheme provides a monthly payout in instalments during the contracted tenure of various lengths. SBI’s monthly payout fundamentally differs from other banks because it has fixed EMI comprising both the partial reducing principal and interest components.

However, the interest paid is compounded quarterly and discounted monthly. In contrast, other banks pay the accrued interest every month, and the principal remains untouched.

SBI Annuity Deposit Scheme Features

As we understand, the scheme is unique within the traditional fixed deposit genre. Let us learn about its critical features. 

  • You must deposit a lump sum amount to subscribe to the scheme.

  • The scheme permits fixed tenures of 36, 60, 84, and 120 months.

  • The minimum deposit is based on a minimum monthly annuity EMI of Rs.1000 for the chosen period. Thus, you have to deposit Rs.36000 to earn the minimum annuity. However, there is no upper investment limit in the Annuity Deposit Scheme.   

  • You are allowed premature withdrawals up to a maximum deposit of Rs.15 Lac. However, charges are recovered per the term deposit governing rules. 

  • The applicable interest rate is the same for domestic term deposits for matching tenures.

  • An annuity is paid on the anniversary date of the following month when booking the deposit. However, the first of the following month is the payment date for a non-existing date. 

  • You can avail of a loan or an OD facility up to 75% of the remaining principal balance. However, the EMIs are then credited to the loan or OD account, as the case may be. 

  • A nomination facility is available under the scheme. 

  • You are not given a term deposit receipt but a passbook for investing in the scheme. 

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Eligibility

SBI Annuity Deposit Scheme is open for subscription like any other term deposit in the bank. You can open the account if you are a resident Indian individual. Minor account represented by a guardian is also permitted. 

You can operate the account singly or jointly. However, the operational instructions must match the account from where the deposit is funded. 

SBI Annuity Deposit Scheme Interest Rate

You have already understood that the interest rate applied in the Annuity Deposit Scheme is the same defined for domestic term deposits. 

Here are current applicable rates of the SBI Annuity Deposit scheme: 

SBI Domestic Term Deposit Rates for Rs 2 Cr and less
Tenors  General Public (%) Senior Citizens (%)
Existing  Revised  Existing  Revised 
36 months  5.30 5.30 5.80 5.80
60 months 5.40 5.40 6.20 6.20
84 months  5.40 5.40 6.20 6.20
120 months 5.40 5.40 6.20 6.20
Existing: effective from 08/01/2022 
Revised: effective from 15/01/2022

Note: Interest rates are subject to change. Please confirm with your bank before investing.

The SBI staff earns a preferential rate of 1% above the card rates. In addition, retirees are further benefited, earning the additional staff rate plus the senior citizen rate depending on the chosen tenure. You must understand that the monthly annuity payable is rounded to the nearest higher rupee. 

SBI Annuity Deposit Scheme Benefits

Let us explore the critical benefits that come your way for subscribing to it:

  • You can adapt to the scheme parameters aligned to your financial capabilities without any upper limit for the subscription. 

  • The scheme walks the extra mile for your steady income need over the tenure of your choice. Accordingly, the scheme is tailor-made for individuals who can make the best of lump-sum deposits to supplement their monthly income. 

  • While opening the account is hassle-free, the account is liquid with an option to close prematurely with an exit load of 1% as a penalty. 

  • Monthly income fixed deposits are ideal for the retired, providing financial independence during their twilight years lacking a regular income source. 

SBI Annuity Deposit Scheme Tax Implications

According to the laws under the Income Tax Act, 1961, interest income on bank deposits is taxable. Let us take a closer look at the provisions:

  • Banks deduct TDS if your annual interest income exceeds Rs.40000. However, the exemption limit is Rs 50,000 for senior citizens.

  • TDS is deducted at 10% of the earned interest if your PAN card is registered with the bank. 

  • However, the TDS is 20% if you fail to register your PAN card. 

  • TDS is deducted at applicable rates whenever the banks apply interest to the deposit after the exemption limits have been exceeded. 

How to Open SBI Annuity Deposit Scheme?

Subscribing to the account is hassle-free and accomplished in a few steps. The prerequisite is that you must be an existing SBI customer. You can fill up the application form with a request to debit your operational savings, current, or OD account with them. 

However, the account should not be dormant and open for transactions through the internet banking channel. 

You can open the Annuity Deposit Scheme at any SBI branch and is transferable across the country. Submit the following documents:

  • Completed and duly signed application form

  • KYC documents for identification and address verification

  • Recent photograph copies

You must remember that the operation instruction in the proposed account should match the debited account. 

In Conclusion

SBI Annuity Deposit Scheme offers a unique opportunity to plan your finances in one of the safest investment vehicles in medium and long-term horizons. You can augment your monthly income from traditional fixed deposits. The annuity is paid in EMIs using a part of the invested principal and the accrued interest to inflate the payout.

FAQ's

  • What is the maturity value of your SBI Annuity Deposit Scheme account?

    The monthly annuity payout comprises a part of the principal and the accrued interest paid throughout the deposit tenure. Hence, the principal is nil at maturity, as it has been paid part by part until maturity. 
  • How does the Annuity Deposit differ from the Recurring Deposit?

    In the Recurring Deposit, you invest in instalments and receive the cumulative maturity value comprising the principal and the accrued interest on maturity. On the other hand, you invest in Annuity Deposit in a lump sum and receive the monthly annuity in instalments resulting in a nil maturity value. 
  • Is there any provision for setting maturity instructions in the SBI Annuity Deposit?

    No, there are no provisions for any maturity instructions as the value of the investment at maturity is always nil. 
  • Are there any name restrictions in opening the Annuity Deposit account?

    The name, style, and operations in the Annuity Deposit must be the same as the source funding account. 
  • When can you add a nominee to the Annuity Deposit account?

    There is a provision in the account opening application form to retain the nominee assigned in the source account.

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