SBI Reinvestment Plan

What is the SBI Reinvestment Plan Term Deposit?

The SBI Reinvestment Plan is a variant of the traditional Fixed Deposit, uniquely designed for wealth accumulation. It automatically reinvests your interest with the principal, allowing the entire sum to compound and provide a larger payout at maturity.

Here’s how the financial product works: 

• You make a one-time deposit with SBI.
• The interest your deposit earns is regularly added back to your principal amount.
• This larger, combined amount then continues to earn interest, leading to exponential growth over time (compounding).
• At the end of your chosen tenure, you receive the total accumulated amount, which includes your initial deposit plus all the compounded interest.

Features of SBI Reinvestment Plan

The SBI Reinvestment Plan offers the following features: 

• Minimum & Maximum Deposit: You can start investing with a minimum deposit of Rs. 1,000/-, with no upper limit on the maximum amount you can deposit.
• Tenure Options: Flexible investment periods ranging from a minimum of 6 months up to a maximum of 10 years.
• Accessibility: The plan is available at all SBI branches. 
• Transferability: You can easily transfer your deposit account to any SBI branch across the country by contacting the bank branch.
• Interest Compounding & Payout: Interest on your deposit is compounded quarterly, and the total accumulated principal plus interest is paid out only at the time of maturity.
• Nomination Facility: You can appoint a nominee so that funds can be transferred in your absence.
• Payment at Maturity: Maturity amounts of ₹ 20,000/- and above will not be disbursed in cash.
• Taxation (TDS): Tax Deducted at Source (TDS) is applicable on the interest earned as per Income Tax Rules. However, you can submit Form 15G or 15H to the bank for exemption from tax deduction if you meet the eligibility criteria.
• Loan Against Deposit: You have the option to avail of a loan against your deposit. The amount you can borrow is a percentage of your deposit, with a small portion (called the 'margin') held as security, which varies based on the remaining tenure:
  • Up to 36 Months remaining: 5% margin (meaning you can borrow up to 95%).
  • More than 36 months & up to 60 months remaining: 10% margin (meaning you can borrow up to 90%).
  • More than 60 months remaining: 15% margin (meaning you can borrow up to 85%).
• Premature Closure: SBI Premature withdrawal of your deposit is permitted, but it will be subject to a penalty:
  • For deposits up to Rs. 5.00 lacs: A penalty of 0.50% (across all tenors) will apply.
  • For deposits above Rs. 5.00 lacs: A penalty of 1% (across all tenors) will apply.
  • The interest rate applicable for premature withdrawals will be the lower of the rate for the period the deposit remained with the bank (minus penalty) or the contracted rate (minus penalty).
• Minimum Period for Interest: No interest will be paid on deposits that remain with the bank for a period of less than 7 days.

Eligibility Criteria for SBI Reinvestment Plan

The following categories are eligible to invest in the SBI Reinvestment Plan:

• Resident individuals (can apply singly or jointly)
• Minors (can invest themselves or through their legal Guardian)
• Karta of a Hindu Undivided Family (HUF)
• Firms
• Companies
• Local Bodies
• Any Government Department

SBI Reinvestment Plan Interest Rates

SBI Reinvestment Plan offers the same interest rates as the SBI FD interest rates offered by the bank.

Note: Interest rates are effective June 2025. Interest rates are subject to change.

Benefits of the SBI Reinvestment Plan

The advantages of SBI Reinvestment Plan are: 

1. Maximized Returns:

   Reinvesting your interest allows your money to earn "interest on interest," leading to significantly higher returns over time compared to simple interest-bearing deposits.

2. Disciplined Wealth Accumulation: 

   Since interest is automatically added back, this disciplined saving tool promotes wealth growth without requiring active management of interest payouts. 

3. Simplified Management: 

   Eliminate the need to manage periodic interest receipts as the plan itself simplifies your financial management by paying the fund amount together at maturity. 

4. Financial Security:

    Fulfil your future financial goals such as retirement, child's education, or purchasing assets with SBI Reinvestment Plan. 

5. Access to Liquidity:

    Despite being a long-term savings plan, it offers provisions for liquidity through loans against your deposit and also permits premature withdrawals in unforeseen circumstances (with applicable terms and penalties).

Conclusion

The SBI Reinvestment Plan is an ideal investment plan for long-term wealth creation and disciplined savings. By using the mechanism of the power of compound interest, it ensures your money works harder for you, providing a substantial maturity amount. SBI Reinvestment Plan is your step to fulfilling your future financial goals.