In response to rising interest rates, the country's largest lender, State Bank of India (SBI), offers SBI Annuity Deposit Scheme, which is nothing more than an investment product in which investors deposit a lump sum and can earn monthly annuity installments that include a portion of the principal amount as well as interest.
Eligibility for SBI Annuity Scheme
According to the SBI's official website, all residents, including minors, are eligible to apply for the scheme in a single or joint application. Customers who are NRO or NRE are not eligible for this, however, senior citizens are eligible for a higher interest rate than the standard rate. According to SBI guidelines, one can apply for the SBI Annuity Scheme with savings, current, or OD accounts. The account chosen for the scheme must be a legitimate operational account with Internet Banking enabled, and it must not have been halted, dormant, or locked.
SBI Annuity Scheme: Maturity Period and Interest
The SBI Annuity Scheme is available at all SBI branches and has tenure options of 36, 60, 84, or 120 months. To establish an SBI Annuity Scheme with maturity duration of 3 to 10 years, a minimum annuity deposit of Rs. 1000 must be made for the applicable period.
The interest rate offered by the SBI Annuity Deposit Scheme will be the same as that offered by term deposits for the term chosen by the account holder. The rate of interest applicable to SBI Term Deposits for the general public and senior citizens will be offered under the SBI Annuity Scheme. SBI raised fixed deposit interest rates on June 14, 2022. On deposits maturing in 3 to 10 years, SBI currently offers an interest rate of 5.45% to 5.50% to the general public and 5.95% to 6.30% to senior citizens. TDS will be applied to the interest paid on the Annuity deposit, and a PAN is required to avoid the TDS amount.
Premature Withdrawal and Overdraft Facility
According to the terms and conditions of SBI, premature closure is permitted in the event of the depositor's death, and premature payment is permitted for deposits up to Rs. 15.00 lacs. Premature withdrawals face the same penalty as term deposits.
According to SBI's current premature closure guidelines, the applicable penalty for term deposits exceeding 5.00 lacs will be 1% (all tenors), and 1% less than the rate applicable at the time of deposit will be provided to the depositor as a premature withdrawal amount for the period of deposit remained with the bank.
For specific circumstances such as education, marriage, or any other emergency, an overdraft/loan of up to 75% of the annuity balance can be issued. Annuity payments, according to SBI, will be credited to the loan account only after the OD/loan has been disbursed.
