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State Bank of India (SBI) offers a wide range of savings, deposits, and investment schemes tailored to meet the needs of diverse demographics. From fixed deposits and recurring deposits to mutual funds and savings accounts, SBI provides secure and profitable options. Among these, the SBI Annuity Deposit Scheme stands out by offering fixed monthly payments for a lump sum deposit, ensuring a steady income stream. This scheme is especially beneficial for young professionals, working professionals, and retirees, providing financial stability and peace of mind through guaranteed monthly annuity payments.
What is SBI Annuity Deposit Scheme?
The SBI Annuity Deposit Scheme is a unique investment product that allows individuals to invest a lump sum amount and receive fixed monthly payments. These payments include both the principal and interest components, providing a steady income stream over the chosen tenure.
SBI Annuity Deposit Programme – Here are the Key Features
1. Deposit a one-time lump sum amount and receive monthly payments to your account. Customers can deposit money in one go and receive it in monthly installments. Each installment includes a portion of principal as well as interest.
2. Flexible deposit tenure: Choose a tenure of 36, 60, 84 or 120 months to suit your financial goals.
3. Widespread availability: Can be availed from any of the SBI branches across the country.
4. Minimum and maximum deposit amounts: The minimum deposit amount is based on a minimum monthly pension of Rs. 1,000 for the chosen tenure. However, one can deposit any amount in the scheme as there is no upper limit.
5. Early redemption option: Early redemption is permitted for deposits up to Rs. 15,00,000, subject to applicable fixed deposit penalty. In case of death of the depositor, prepayment is permitted without any restriction.
6. Competitive interest rates: This scheme enjoys interest rates as applicable on both general and retirement fixed deposits.
7. Annuity payment schedule: Annuity payments are made on the anniversary of the month following the payment month. If the payment date falls on a non-existent date (like 29th, 30th, 31st), it will be paid on the 1st of the following month.
8. Nomination options: The depositor can nominate an individual as a nominee.
9. Overdraft/Loan options: In special cases, overdraft or loan up to 75% of the pension balance is allowed. Once the overdraft/loan is paid, further pension payments are paid into the loan account only.
10. Universal passbook: The depositor is issued a universal passbook, making it easier to track your investments.
11. Transferability: This deposit scheme allows portability across SBI branches, providing flexibility and ease of operation.
What are the Benefits of Investing in the SBI Annuity Deposit Scheme?
- Fixed Monthly Income: Enjoy the convenience of fixed monthly payments inclusive of both principal and interest, providing you with a reliable and predictable source of income.
- Flexible Tenure Options: Choose the tenure that suits your needs from 36 months (3 years) to 120 months (10 years) and align your investments with your financial goals.
- Need some extra cash? You can get a loan of up to 75% of the amount you deposit, giving you flexibility and liquidity when you need it most.
- Nomination Options: Rest assured that in the event of your death, the benefits will be smoothly passed on to your loved ones, providing you with added peace of mind.
- Competitive Interest Rates: Benefit from attractive interest rates that are in par with SBI fixed deposit rates, ensuring superior returns. Interest is calculated on a declining balance basis, ensuring transparency and fairness.
- Risk-free Investment: Rest assured knowing that your investments are safe with State Bank of India. The program is a low-risk option, ideal for those looking for assured returns without the stress of market fluctuations.
Interest Rates of SBI Annuity Deposit Scheme
The scheme offers the same interest rates applied to Domestic Term Deposits. Here are the latest interest rates as per the bank website:
Tenure | General Public (< ₹3 Crores) | Senior Citizens (< ₹3 Crores) | General Public (≥ ₹3 Crores) | Senior Citizens (≥ ₹3 Crores) |
|---|---|---|---|---|
7 days to 45 days | 3.50% | 4.00% | 5.25% | 5.75% |
46 days to 179 days | 5.50% | 6.00% | 6.25% | 6.75% |
180 days to 210 days | 6.25% | 6.75% | 6.60% | 7.10% |
211 days to less than 1 year | 6.50% | 7.00% | 6.75% | 7.25% |
1 year to less than 2 years | 6.80% | 7.30% | 7.00% | 7.50% |
2 years to less than 3 years | 7.00% | 7.50% | 7.00% | 7.50% |
3 years to less than 5 years | 6.75% | 7.25% | 6.50% | 7.00% |
5 years and up to 10 years | 6.50% | 7.50% | 6.25% | 6.75% |
Disclaimer: The features, interest rates, and all other information specified above are as of when this page was written and are subject to change. For exact information, contact the bank or refer to their website.
Check out the latest FD interest rates across different banks here.
Who is Eligible for the SBI Annuity Deposit Scheme?
- Resident Indian citizens, including minors with a guardian, are eligible to invest in this scheme through either single or joint accounts.
- Customers under the NRE (Non-Resident External) or NRO (Non-Resident Ordinary) categories cannot invest under the SBI Annuity Deposit Scheme.
How to Apply for SBI Annuity Deposit Scheme?
Offline Application
1. Visit Your Nearest Branch: Head to the closest SBI branch to you.
2. Fill in the Application Form along with any other necessary documents.
3. Specify the Debit Account from which the lump sum amount should be debited.
4. Enter Deposit Amount and Tenure: You choose a tenure of 36, 60, 84, or 120 months.
5. Receive Annuity Payments: Once the deposit account is created, you will start receiving the annuity amount from the first monthly anniversary of the deposit creation date.
Online Application
1. Log in to SBI Netbanking: Access your SBI Netbanking account (note: this option is not available through the SBI YONO app).
2. Navigate to the e-Annuity Deposit option by clicking on Deposit & Investment >> Deposit >> e-Annuity Deposit.
3. Select Debit Account: Choose the account from which the initial deposit amount will be debited.
4. Enter Amount: Input the desired deposit amount.
5. Senior Citizen Checkbox: If you are a senior citizen, tick the appropriate checkbox.
6. Choose Tenure: Select your preferred tenure (36, 60, 84, or 120 months).
7. Agree to the T&Cs by clicking the check box.
8. Submit: Finalize your application by submitting the form.
Are you in the market for a retirement plan? This blog will be an interesting read for you - Retirement Planning An Introductory Guide To Retirement Plans In India
How are SBI Annuity Payments Calculated?
The monthly annuity payments for the SBI Annuity Deposit Scheme are calculated using a formula that compounds interest quarterly. This ensures that the depositor receives both principal and interest components in their monthly payments.
Formula for Calculation: A=P(1+rn) ^(n*t)
- A = Maturity amount
- P = Principal amount
- r = Rate of interest
- n = Number of times the interest compounds in a year
- t = Total tenure in years
Example Calculation:
Let's consider an example of Mr. Sanjay, with the following deposit:
- Principal amount (P): ₹2 crores
- Rate of interest (r): 6.5%
- Tenure (t): 10 years
- Compounding frequency (n): 4 (quarterly)
Placing these values into the formula: A=2,00,00,000(1+0.065) ^ (4*10)
This means the total interest earned over 10 years would be approximately ~₹1,81,00,000, resulting in a maturity amount of around ~₹3,81,00,000.
Since the annuity payments are monthly, Mr. Sanjay would receive: ₹3,81,00,000/120 = ~₹3,17,500.
In case Mr. Sanjay is a senior citizen, his deposit will earn an interest rate of 7.5% p.a, and the calculation would be:
A=2,00,00,000(1+0.0754) ^ (4*10) = ~₹4,20,50,000
This means a senior citizen would receive a Monthly Annuity Payment of ₹4,20,50,000/120 = ~₹3,50,400
How does SBI Annuity Deposit Scheme Compare with other investment options?
When considering SBI Annuity Deposit Scheme, it is important to understand its unique benefits and features compared to other popular investment options.
Comparison with Fixed Deposits
Monthly Income: Unlike traditional fixed deposits where interest is paid at maturity or at fixed intervals (quarterly, half-yearly or annually), SBI Annuity Deposit Scheme offers fixed monthly payments. It provides a stable income, making it ideal for those who require regular cash flow.
Repayment of Principal: While this annuity scheme repays the principal over your scheme tenure, fixed deposits repay the principal at the end of the term.
Comparison with Mutual Funds
Risk Factors: While mutual funds are subject to market risks and may fluctuate, SBI Annuity Deposit Scheme offers a guaranteed return without market fluctuations.
Regularity of Income: Mutual funds may not give you regular monthly income, whereas annuity programs offer fixed monthly payments.
Liquidity: Mutual funds are liquid and can be easily withdrawn (subject to withdrawal fees), whereas early withdrawal from a retirement program may incur penalties.
Comparison of Recurring Deposits
Investment Structure: In Recurring Deposits, you invest a fixed amount every month to reap the benefits at the end of the tenure. Whereas the SBI Annuity Deposit Scheme require a one-time lump sum investment.
Income Generation: Recurring deposits pay out interest and principal on maturity, ensuring regular income, unlike annuity programs that offer monthly payments.
Additional Read: SBI Monthly Income Schemes
Who Should Consider This Program?
SBI Annuity Deposit Scheme targets different segments and provides a secure and stable source of income.
Suitability for Youngsters Starting their Career: Young professionals looking for stable and low-risk investment opportunities can benefit from a regular monthly income that will supplement their salary and help them in financial planning.
Suitability for Working Professionals: For working professionals, the programme provides an additional regular source of income, helping them in better financial management and planning for future expenses and investments.
Suitability for Retirees: We believe that the programme is particularly beneficial for retirees as it provides a sure and stable monthly income, ensuring financial safety and security post retirement.
Tax Implications: Understanding the tax implications of SBI Annuity Deposit Scheme is crucial for effective financial planning.
Tax Benefits: The programme itself does not offer any direct tax benefits. However, the interest earned is taxed in the same manner as a normal fixed deposit.
Tax Liability: The interest paid under the pension scheme is subject to Tax Deducted at Source (TDS) as per the applicable income tax law. This means that if the interest income exceeds the specified limit, TDS will be deducted, affecting the monthly pension amount received on a net basis.
1. Will I get any maturity amount at the end of SBI Annuity Deposit Scheme tenure?
SBI Annuity Deposit Scheme is a scheme where a portion of the principal amount and interest on the reduction in the principal amount are repaid in instalments over a period of time. So there won’t be any maturity amount at the end of tenure.
2. What are the minimum and maximum terms for deposit?
You can choose a term of 3, 5, 7 and 10 years for your SBI Annuity Deposit Scheme. This means you have the flexibility to choose the term to suit your financial plan.
3. Who can deposit in the SBI Annuity Deposit Scheme?
This scheme is open to any Indian resident individual customer, including minors with legal guardianship. However, NRO (Non-Resident Ordinary) and NRE (Non-Resident External) customers cannot invest in SBI Pension Deposit Scheme.
4. How much can one invest in the SBI Annuity deposit scheme?
The minimum deposit amount is based on the minimum monthly pension of ₹1000 for the chosen tenure. For example, if the tenure is 3 years, the minimum deposit amount is ₹36,000. The online deposit limit is subject to transaction limits on fund transfer within the account.
5. Can senior citizens get additional interest on pension deposits?
Yes, senior citizens can get 0.5% higher interest rates on their deposit into the SBI Annuity Deposit Scheme.
6. Are SBI Annuity Deposits subject to tax deduction at source?
Yes, the interest amount paid on the SBI Annuity Deposits is subject to tax deduction at source (TDS).
7. Can I add a new beneficiary online?
Yes, you can add a new beneficiary online if no beneficiary was specified at the time of opening the account. You can also change the beneficiary by cancelling the existing beneficiary and specifying a new one.
Disclaimer: This page includes information that has been compiled from many sources and is only offered for informational purposes. Since this type of data might change over time, we cannot guarantee that the information supplied or included within it is accurate. It is anticipated that the user would confirm with the relevant source prior to taking any choices or actions.
