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Union Bank FD – Interest Rates, Features, Types of FDs and FAQs

union bank fd rates

Introduction

Union Bank FDs offer higher interest than Union Bank savings accounts. The FDs have a minimum investment of INR 1,000 with a minimum tenure of 7 days and a maximum tenure of 10 years. Union Bank FD interest rates for senior citizens are higher by 0.5%. The bank also provides loan facility on FD investment and charges a penalty on interest for premature withdrawals.

Union Bank FD interest rates 2020

The table below shows Union Bank FD rates for different tenures for regular and senior citizens.

TenureFixed Deposit Interest RatesSenior Citizen Fixed Deposit Interest Rates
7 days to 14 days3.00%3.50%
15 days to 30 days3.00%3.50%
31 days to 45 days3.00%3.50%
46 days to 90 days3.75%4.25%
91 days to 120 days4.25%4.75%
121 days to 180 days4.30%4.80%
181 days to 364 days4.50%5.00%
1 year5.25%5.75%
1 year 1 day to 3 years5.25%5.75%
3 years 1 day to 5 years5.30%5.80%
5 years 1 day to 10 years5.40%5.90%

Note: Union Bank revises Fixed Deposits rate periodically 

Union Bank fixed deposit rates are higher than their savings bank account rates. The interest on Union Bank Fixed Deposit is paid quarterly or half-yearly, as per the customer’s choice. If the payments days fall on bank holidays, then the interest will be a credit on the next working day.

Union Bank FD investment is not eligible for tax exemption under Section 80C of the Income Tax Act. However, investment in tax saving FDs qualifies for tax exemption. Investors can avail of the tax benefit while filing their income tax returns.

The interest earned on Union Bank FDs is taxable as per the investor’s income slab rates.  Furthermore, there is a TDS of 10% if the interest income exceeds INR 40,000 per annum (INR 50,000 for senior citizens). If the investors don’t provide PAN details, then the TDS will be cut at 20%.

Key Features of Union Bank of India Fixed Deposit

Union Bank of India Fixed Deposit accounts is suitable for investors looking at better returns than a bank saving account.

Following are the key features of the Union Bank of India fixed deposit account:

  • Tenure: The tenure ranges between seven days to ten years for this term deposit
  • Minimum Deposit Amount: The minimum amount to open an FD with Union Bank of India is INR 100.
  • Maximum Amount: No limit
  • Union Bank of India FD Interest Rate: This savings scheme offers interest rates in the range of 3.00% p.a to 5.40% p.a.
  • Preferential Interest Rates: Senior citizen depositors get preferential interest rates. The deposit scheme interest rates range between 3.50% p.a to 5.90% p.a.
  • Safety: Deposits in Union Bank of India up to INR 5,00,000 are covered under the Deposit Insurance Scheme of RBI.
  • Loan against FD: Union Bank of India offers loans against FD. This is to help depositors meet their liquidity requirements.
  • Nomination Facility: The bank allows depositors to nominate beneficiaries for this term deposit.
  • Auto-Renewal: Union Bank of India provides the auto-renewal facility of the FD account.
  • Convenience: One can open Union Bank FD investment online at their convenience. They can create an account and fill the online application form to start their fixed deposit investments.

Types of Fixed Deposits

  • Short Deposit Receipt (SDR)
  • Fixed Deposit Receipt
  • Monthly Income Scheme
  • Tax Saver Deposit
  • Deposit Re-investment Certificate (DRIC)
  • Easy Tax Saver Deposit
  • Cumulative Deposit

Types of Fixed Deposits: In Detail

Short Deposit Receipt (SDR)

  • The minimum deposit tenure is seven days, while the maximum deposit tenure is 179 days.
  • The minimum deposit amount is INR 1,000, while there is no limit on the maximum amount.
  • For a short deposit receipt account, the interest is computed quarterly, however, paid half-yearly.
  • The account allows the nomination facility and also allows the depositor to avail loan against the deposit amount.
  • The deposit account will be auto-renewed for the same period at the applicable interest rate on the maturity date. This is done only in the absence of specific instructions. The scheme allows premature closure, however with a penalty, if any.

Fixed Deposit Receipt

  • The minimum deposit tenure is six months, while the maximum deposit tenure is 120 months.
  • The minimum deposit amount is INR 1,000, while there is no limit on the maximum amount.
  • For a fixed deposit receipt account, the interest is paid either half-yearly or quarterly as per the instructions.
  • Nomination facility is available with this account, and also it allows the depositor to avail loan against their deposit amount.
  • The deposit account will be auto-renewed for the same period at the applicable interest rate on the maturity date. This is done only in the absence of specific instructions. The scheme allows premature closure, however, a penalty may be charged, if any.

Monthly Income Scheme

  • The minimum deposit tenure is twelve months, while the maximum deposit tenure is 120 months.
  • Minimum deposit amount is INR 1,000, and in multiples of INR 100 thereafter. Furthermore, there is no limit on the maximum amount.
  • For the monthly income scheme, the interest is paid monthly at a discounted value.
  • Nomination facility is available as per the guidelines. Also, the scheme allows depositors to avail loans against their deposit amount.
  • The deposit account will be auto-renewed for the same period at the applicable interest rate on the maturity date. This is done only in the absence of specific instructions. The scheme allows premature closure, and the interest is paid for the run period. However, a penalty may be charged, if any. 

Tax Saver Deposit

  • The tax saver deposit scheme gives the depositor the benefit of tax exemption under Section 80C of the Income Tax Act.
  • The minimum deposit tenure is five years, while the maximum deposit tenure is ten years.
  • Minimum deposit amount is NR 5,000, and in multiples of INR 5,000 thereafter. Also, the maximum limit is INR 1,50,000 in a financial year.
  • The loan against this deposit scheme is allowed only after the lock-in period of five years.
  • Also, premature closure is available only in case of the death of the primary account holder. Furthermore, there is no penalty for such closures.

Deposit Re-investment Certificate (DRIC)

  • The minimum deposit tenure is six months, while the maximum deposit tenure is 120 months.
  • Minimum deposit amount is INR 1,000, and there is no limit on the maximum amount.
  • For DRIC, the interest is computed and compounded quarterly. The interest amount is credited half-yearly.
  • Nomination facility is available as per the guidelines. Also, the scheme allows depositors to avail loans against their deposit amount.
  • The deposit account will be auto-renewed for the same period at the applicable interest rate on the maturity date. This is done only in the absence of specific instructions. The scheme allows premature closure, and the interest is paid for the run period. However, a penalty may be charged, if any. 

Easy Tax Saver Deposit

  • The easy tax saver deposit scheme provides flexibility to the depositor to invest through monthly installments. The account shall be in a continuous format. In other words, the depositor can start by investing a minimum of INR 1,000 and in multiples of INR 1,000 thereafter. Also, the maximum limit is INR 1,50,000 in a financial year.
  • Furthermore, the deposits have a lock-in period of five years.
  • Depositors cannot avail loans against this deposit account. Premature closure is available only in case of the death of the primary account holder. Furthermore, there is no penalty for such closures.

Cumulative Deposit

  • The cumulative deposit account mainly aims at the lower, lower-middle, middle, upper-middle, and salaried sector. It encourages small investors to save monthly over a fixed period of time. 
  • The minimum deposit tenure is six months, while the maximum deposit tenure is 120 months.
  • Minimum deposit amount is INR 50, and there is no limit on the maximum amount.
  • The interest is compounded quarterly and credits half-yearly.
  • Additionally, the scheme doesn’t charge any penalty for delay or non-deposit of the monthly installment amount.
  • Nomination facility is available as per the guidelines. Also, the scheme allows depositors to avail loans against their deposit amount.
  • The scheme allows premature closure, and the interest is paid for the run period. However, a penalty may be charged, if any. Also, for closure within a month of account opening, no interest shall be paid.

What is the tenure range for Union Bank Fixed Deposit?

The tenure range for Union Bank FD is seven days to 10 years. The tenure breakdown is given below:

Tenure
7 days to 14 days
15 days to 30 days
31 days to 45 days
46 days to 90 days
91 days to 120 days
121 days to 180 days
181 days to 364 days
1 year
1 year 1 day to 3 years
3 years 1 day to 5 years
5 years 1 day to 10 years

Who is eligible for opening a fixed deposit account in Union Bank?

The eligibility criteria for opening a Union Bank FD is

  • Any Resident Individual including illiterate persons, purdanasheen ladies, Minors, and blind persons – Single Account
  • Two or more individuals in Joint Accounts
  • Associations, Societies, Clubs, etc.
  • Institutions/Agencies, Trusts, permitted explicitly by the RBI eligible to open a Fixed Deposit account in single/joint names.

What are the documents required to open a Fixed Deposit account in Union Bank?

One can invest in Union Bank Fixed Deposit online or offline. They can invest online via internet banking. And they can invest offline by physically visiting the branch of Union Bank. The documents required to open a fixed deposit account in Union Bank are:

  • FD application form
  • Address proof as per KYC norms. (Telephone bill, Aadhar card, Bank Statement with cheque, Electricity bill)
  • Pan Card or a declaration in Form No. 60 or 61 of the Income Tax Act
  • Identity Proof as per KYC norms. (PAN Card, Passport, Aadhar Card, Driving License, Voter ID Card)
  • Senior Citizen ID Card (for senior citizens)
  • 2 Photographs
  • Any other documents as applicable for company, partnership, HUF, trust, association, proprietorship, or institution etc.  

What is the current interest rate on fixed deposit schemes in Union Bank?

The interest on Union Bank Fixed Deposit is paid quarterly or half-yearly, as per the customer’s choice. If the payments days fall on bank holidays, then the interest will be a credit on the next working day. The current Union Bank fixed deposit rates for regular citizens are:

  • For a tenure of 7-45 days, it is 3.00%
  • A tenure of 46-90 days it is 3.75%
  • For 91-120 days of tenure, it is 4.25%
  • A tenure of 121-180 days has an interest of 4.30%
  • From 181 days to 364 days it is 4.5%
  • Tenure of 1 year to 3 years it is 5.25%
  • From 3 years 1 day to 5 years, it is 5.30%
  • Any FD with a tenure of 5 years 1 day to 10 years is 5.40%

The current Union Bank fixed deposits rates for senior citizens are:

  • For a tenure of 7-45 days, it is 3.50%
  • A tenure of 46-90 days it is 4.25%
  • For 91-120 days of tenure, it is 4.75%
  • A tenure of 121-180 days has an interest of 4.80%
  • From 181 days to 364 days it is 5.0%
  • Tenure of 1 year to 3 years it is 5.75%
  • From 3 years 1 day to 5 years, it is 5.80%
  • Any FD with a tenure of 5 years 1 day to 10 years is 5.90%

To calculate the maturity amount of an FD investment, an investor can use a fixed deposit calculator. Scripbox’s fixed deposit calculator is available online and is free to use. Alternatively, one can use the Union Bank FD Calculator to calculate the maturity amount.

Is PAN mandatory to open a Union Bank FD account?

Details of PAN aren’t mandatory to open a Union Bank FD account. Even if PAN isn’t compulsory for an FD investment, there are a few implications for the same.

  • TDS rate will be 20% instead of 10% as per section 206AA
  • The bank will not issue any TDS certificate.
  • All exemption certificates, including Form 15G/H, will be invalid.

Can I open an FD account without holding a bank account with Union Bank?

Yes, one can invest in Union Bank FD without having a ‘Union Bank’ bank account. To invest in Union Bank FD, the individual needs to submit the following documents:

  • FD application form
  • Address proof as per KYC norms. (Telephone bill, Aadhar card, Bank Statement with cheque, Electricity bill)
  • Pan Card or a declaration in Form No. 60 or 61 of the Income Tax Act
  • Identity Proof as per KYC norms. (PAN Card, Passport, Aadhar Card, Driving License, Voter ID Card)
  • Senior Citizen ID Card (for senior citizens)
  • 2 Photographs
  • Any other documents as applicable for company, partnership, HUF, trust, association, proprietorship, or institution etc. 

What are the tax implications of fixed deposits?

Investment in Union Bank tax-saving FDs qualifies for tax exemption under Section 80C of the Income Tax Act. Investors can avail of the tax benefit while filing their income tax returns.  However, investment in any other Union Bank FDs doesn’t qualify for tax saving. The interest on Union Bank FDs is taxable as per the individual’s income tax slab rates. Moreover, there is a TDS for interest income above INR 40,000 (INR 50,000 for senior citizens) per annum. The rate of TDS is 10% if the PAN is submitted and 20% if it isn’t submitted.

To know whether the interest income is above or below the TDS threshold limit, one can use Union Bank FD calculator. One can use an Income Tax Calculator to estimate their tax liability. Scripbox’s Income Tax Calculator estimates the tax liability accurately. It is free to use and is available online.

Does Union Bank offer Recurring Deposits?

Yes, Union Bank offers recurring deposits to its depositors. Union Bank RDs have a minimum tenure of 180 days and a maximum tenure of 10 years. Depositors can open an RD account with Union Bank either by going to the bank branch or online using net banking. Below are the Union Bank RD interest rates for different tenures.

TenureGeneral RatesSenior Citizen Rates
180 days to 364 days5.50%5.50%
1 year5.75%5.75%
1 year 1 day to 443 days5.75%5.75%
445 days to 554 days5.75%5.75%
444 days5.85%5.85%
555 days5.90%5.90%
556 days to 2 years 12 months 31 days5.75%5.75%
3 years to 10 years5.80%5.80%

Note: Union Bank revises RD interest rates periodically 

Can I take a loan against a fixed deposit?

Union Bank offers loans against fixed deposits. The bank offers loans up to 90% of the deposit amount. Union Bank will give a bank loan against Union Bank FD only, and the tenure of the bank loan is limited to the tenure of the FD.

Loans such as business loans, loan against property (home loan), an education loan, etc., can be taken against Union Bank FD. An investor can always calculate their loan EMI using the loan EMI calculator. Scripbox’s loan EMI calculator works as a home loan calculator, a personal loan EMI calculator and car loan calculator. The investor can also use this EMI calculator in multiple scenarios by changing the home loan interest rate, personal loan interest rate and car loan interest rate.

Frequently Asked Questions

What is the highest Union Bank FD rate?

The highest fixed deposit rate for Union Bank is 5.40% for a regular investor for the tenure of 5-10 years. For the same tenure, the senior citizen rate is 5.90%. Union Bank FD schemes pay an additional 0.5% for senior citizens. Returns from Union Bank FD schemes can be calculated using Union Bank FD calculators.

What is the minimum amount that I have to give for opening a Fixed Deposit with Union Bank?

The minimum amount required to open an FD account with Union Bank is INR 1,000. Also, there is no limit on the maximum investment amount.

Can I deposit an additional amount in my Fixed Deposit account?

No, it is not possible to deposit any additional amount in an existing Union Bank fixed deposit. However, one can always invest in another Union Bank FD with a different amount.

How can I change the tenure of my existing fixed deposit account with Union Bank?

One cannot change the tenure of an FD after investing in it. However, one can opt for premature withdrawal. Alternatively, they can also take a loan against the FD. Also, one can close the existing Union Bank FD and start a new FD with the desired tenure.

Is the penalty changed for early withdrawal?

Yes, Union Bank charges a penalty for premature withdrawal. For all deposits of INR 2 crore and below, if the investment is withdrawn after completion of 7 days, then the penalty is 1% on the interest accumulated till date from the date of opening. If the withdrawal happens before seven days from the date of investment, then there is no penalty.

Published on November 17, 2020