SBI Annuity Deposit Scheme

What is the SBI Annuity Deposit Scheme?

Being one of the best pension plans, the SBI Annuity Deposit Scheme is suitable for individuals looking forward to obtaining a fixed monthly income by depositing a lump sum amount in their bank account. These monthly payments, known as annuities, have their interest added up every three months, but you receive the payout every month. You can choose a term of three, five, seven, or ten years for the scheme.

Here’s how it works:

• You deposit a lump sum of one time with SBI.
• SBI pays you back in fixed monthly instalments over your chosen tenure.
• Each installment combines principal and interest.
• The interest compounds quarterly but is paid out monthly.
• You can choose a deposit term of 3, 5, 7, or 10 years.

Features of the SBI Annuity Deposit Scheme 

Features of the SBI Annuity Deposit Scheme are: 

1. Branch Transferability: 

   Easily transfer your annuity deposit account between any SBI branches across India.

2. Accessible throughout India: 

   Invest from any SBI branch in the country.

3. Minimum Investment: 

   Start with a small amount of Rs. 1,000.

4. No Upper Limit:

    Invest any amount you like; there's no maximum cap.

5. Regular Monthly Payouts: 

   Deposit a one-time lump sum and receive fixed monthly installments, combining a portion of your principal and the interest earned.

6. Flexible Terms: 

   Choose your deposit tenure from 3, 5, 7, or 10 years.

7. Convenient Payment Dates: 

   Receive payouts on the anniversary of your deposit month or the 1st of the following month if the date doesn't exist.

8. Universal Passbook: 

   Track your annuity and term deposit investments in one place.

9. Nomination Facility: 

   Appoint a beneficiary to receive your returns in your absence.

10. Overdraft/Loan Facility (Subject to Approval): 

    The bank may grant an overdraft or loan for up to 75% of your deposit balance in special circumstances.

11. Loan Repayment Integration: 

    If you avail of an overdraft or loan, subsequent annuity payments will be directly deposited into your loan account for repayment.

12. Premature Withdrawal (up to Rs. 15 Lakhs): 

    Access your funds before maturity, but a penalty fee may apply.

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What are the Components Of The SBI Annuity Scheme?

The SBI Annuity Scheme comprises several key components that investors should be aware of:

1. Interest Rate: 

   The interest rates under this scheme are determined based on the chosen investment tenure. Each percentage point in this annuity plan is divided into ten parts, known as basis points.

2. Eligibility: 

   Indian residents, including minors, can invest in the SBI Annuity Scheme. However, Non-Resident Indians (NRIs) cannot participate in this scheme.

3. Taxation: 

   Investors are subject to TDS (Tax Deducted at Source) charges on the returns earned from the SBI Annuity Deposit Scheme. The bank rounds off the interest to the nearest rupee, potentially affecting the final annuity installment.

4. Premature Payment: 

   In the unfortunate event of the investor's demise during the tenure, premature payment of instalments is permitted. The legal heirs or joint account holders can receive the scheme's returns after the investor's death.

5. Maturity Amount: 

   The scheme pays out principal and interest based on the reduced principal amount over time, ultimately resulting in a maturity amount of zero at the end of the maturity period.

Eligibility Criteria Under The SBI Annuity Scheme

• Anyone who is looking to invest in an SBI annuity scheme should be a resident individual, which could also include a minor. 
• The mode of holding could be joint or single.
• Any customer falling into the category of NRE and NRO cannot access this facility.

SBI Annuity Deposit Scheme Interest Rates 2025

The interest rate offered by the Annuity Deposit Scheme at the State Bank of India are: 

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

Benefits of the SBI Annuity Deposit Scheme

Below are the benefits of the SBI Annuity Deposit Scheme: 

1. Competitive Interest Rates: 

   The scheme offers attractive interest rates comparable to SBI's term deposits, providing investors with a reliable and stable source of income.

2. Predictable Cash Flow: 

   Receive consistent monthly payouts, simplifying personal budgeting and retirement planning, while ensuring a steady flow of funds for regular expenses.

3. Additional Benefits for Senior Citizens: 

   Senior citizen investors receive an extra interest rate, enhancing their returns and providing a cushion against inflation.

4. Insurance Coverage: 

   In the unfortunate event of the depositor's death, the bank will make the full payment in advance, ensuring that the depositor's family or beneficiaries receive the entire amount without any hassle.

5. Streamlined Financial Tracking: 

   Benefit from a universal passbook that consolidates your annuity and other term deposit investments for effortless management and oversight.

6. Secured Succession Planning: 

   The nomination facility provides peace of mind, ensuring a smooth and hassle-free transfer of scheme benefits to your chosen beneficiary.

7. Emergency Liquidity Access: 

   Provides a provision for premature withdrawal (up to Rs. 15 Lakhs), offering essential liquidity during unforeseen financial emergencies, albeit with applicable charges.

8. Nationwide Accessibility: 

   Enjoy the convenience of investing and managing your scheme from any SBI branch nationwide, ensuring seamless service regardless of your location.

How is the SBI Annuity Deposit Calculated?

The State Bank of India uses the formula provided below to compute quarterly interest, resulting in monthly returns.

SBI Annuity Deposit Example

To understand how the SBI Annuity Deposit Scheme works, let’s consider an example.

Mr. Sharma decides to invest ₹1,00,000 in the SBI Annuity Deposit Scheme for a tenure of 7 years. The bank offers him an interest rate of 6.75% per annum.

The bank calculates compound interest quarterly and provides Mr. Sharma with equal monthly installments (EMIs). Each EMI consists of both interest and principal components.

SBI Annuity Deposit Calculation

Using this formula, the total maturity amount Mr. Sharma will receive over 7 years is ₹1,64,500, with ₹64,500 as total interest.

As per the annuity scheme, Mr. Sharma will receive a monthly payout of ₹1,955, which includes both interest and principal, until the end of his tenure. After 7 years, the maturity amount will be ₹0.

SBI Annuity Deposit Scheme Calculator 2025

If you're considering investing in the SBI Annuity Deposit Scheme, it's important to calculate your expected returns beforehand. While manual calculations using the compound interest formula are possible, they can be time-consuming and prone to errors.

To streamline this process and save time and effort, you can use an online calculator specifically designed for the SBI Annuity Deposit Scheme. The SBI Annuity Deposit Calculator is readily available online and is free to use. By inputting the relevant values, you can obtain accurate and instant results, allowing you to explore various investment scenarios and select the right investment amount that aligns with your financial goals.

Conclusion

The SBI Annuity Deposit Scheme is one of the best investment options for individuals seeking a steady stream of income. With its accessible investment requirements, flexible terms, and nomination facility, it tries to meet various financial goals. Whether you're planning for retirement or simply want to create a predictable income source, the SBI Annuity Deposit Scheme offers a secure and convenient solution.