SBI Annuity Deposit Scheme channelizes savings of a person to get regular monthly income. Investors can deposit their savings in a lump sum to get monthly income over a fixed tenure. This article covers the SBI Annuity Deposit Scheme, its features and frequently asked questions about the scheme in detail.
What is the SBI Annuity Deposit Scheme?
SBI Annuity Deposit Scheme is a scheme which enables investors to use their savings to get regular income. In this scheme, an investor can invest in a lump sum and receive Equated Monthly Instalments (EMI). The EMI includes both the principal and interest. The interest is compounded quarterly and discounted to monthly EMI value. Also, the rate of interest will be as per SBI rules and norms.
All resident individuals, including minors, can invest in this scheme through single or joint accounts. The minimum deposit amount should not be less than INR 25,000. There is no limit on the maximum amount of investment in the SBI Annuity Deposit Scheme. Investors can choose from the available tenure options, which are 36, 60, 84 or 120 months. Moreover, investors can take a loan against their SBI annuity deposit scheme. However, it is granted only for special cases.
Features of SBI Annuity Deposit Scheme
- Tenure of deposit: The scheme is available in 4 different tenures. Investors can choose from 36, 60, 84 or 120 months.
- Minimum and maximum deposit: The minimum amount of deposit is INR 1,000 per month for the relevant period. So, for a tenure of 5 years, the minimum deposit is INR 60,000 in SBI Annuity Deposit Scheme. However, there is no limit on the maximum investment amount.
- Interest rate: The interest rate for the scheme will be similar to the term deposit interest rates of SBI. Moreover, senior citizens can get an additional rate on their deposits.
- Account opening: All the SBI branches have this scheme. Investors can open a single or joint account in any of the SBI branches. SBI will issue a universal passbook at the time of opening the account.
- Annuity payment: The annuity payments start a month later, from the date of deposit. In case the payment date falls on non-existent dates like 31st or 30th, then the payment will be made on the 1st of the next month.
- Nomination facility: Available only in favour of individuals.
- Overdraft or loan: Investors can take a loan up to 75% of the balance amount annuity. However, the loan will be granted only in special cases. Also, in case the loan is granted, the next annuity payment will be deposited in the loan account only.
- Transferability: The SBI annuity account is freely transferable among branches.
- Premature withdrawal: Premature is available only upon investor’s death and only at the branch where the account is opened.
Eligibility to Invest in SBI Annuity Deposit Scheme
All resident individuals, including minors, can invest in the SBI Annuity Deposit Scheme. Also, they can open a single or a joint account in any SBI branch across the country. Also, customers falling under the NRE and NRO category cannot open the SBI Annuity Deposit Scheme.
Is an annuity deposit scheme different from a regular fixed deposit?
In the case of a regular SBI fixed deposit scheme, the investors pay the deposit amount in a lump sum and get the interest regularly as per their choice and principal at the time of maturity. Or the investors can get the principal and interest directly at the time of maturity. In an annuity scheme, the investor pays the deposit amount in a lump sum in order to get the principal and interest in equated monthly instalments.
Check out latest fixed deposit interest rates.
Is an annuity deposit scheme different from a recurring fixed deposit?
In a SBI recurring deposit scheme, the investors pay the deposit in regular instalments and receive a lump sum at the time of maturity. Whereas, in SBI Annuity Scheme, the investor deposits a lump sum amount to get monthly income (principal plus interest) over the selected tenure.
Learn the difference between fixed deposit vs recurring deposit.
Frequently Asked Questions
Yes, the interest earned from the scheme is liable to TDS.
No, you cannot add a new nominee online. You have to visit the branch to add or change the nominee details. While opening the SBI Annuity Deposit account, the investor has to mention all the nominee details. Alternatively, you will be given an option where the nominee of the bank account from where the funds will be transferred can be the nominee of this account as well.
Premature withdrawal is allowed only upon the death of the investor and only at the branch where the account is opened. Moreover, premature payment is available only for deposits up to INR 15 lakhs. Also, SBI charges a premature withdrawal penalty. The penalty is similar to that of SBI term deposits.
The minimum amount of deposit is INR 1,000 per month for the relevant period. So, for a tenure of 5 years, the minimum deposit is INR 60,000 in the SBI Annuity Deposit Scheme.
The investor will be paid principal and interest on the reducing principal over the tenure of the scheme. Hence the maturity amount will be zero.