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Financial security is a concern for the old and aging. Generally, they lock away funds in FDs or some other safer forms of investment. Though these schemes are safe, they do not generate a lot of return. The Senior Citizen Saving Scheme by the State Bank of India (SBI) provides an easy way to generate income. It is a safe investment that does not require much effort or time commitment on your part. 

Features of SBI Senior Citizen Savings Scheme

SBI Senior Citizens Savings Scheme is backed by the Government of India. Designed for those 60 years or more in age, it is a safe scheme offering tax benefits to investors. The salient features of the scheme make it an ideal option for retired taxpayers. Customers of the State Bank of India can enjoy the attractive interest rates of the Senior Citizen Saving Scheme SBI.

Following are the features of the SBI Senior Citizen Savings Scheme:

  • The minimum deposit amount for the SCSS scheme is Rs.1,000. The deposit in this scheme cannot exceed Rs.15 lakh.
  • Once the maturity period of 5 years is over, you can extend it for a period of another 3 years.
  • If you deposit in a joint account only the first account holder will receive the entire amount.
  • The depositor can add more than one nominee to the account.
  • The Government of India declares interest rates of the SCSS scheme on a quarterly basis. All investments made in the scheme generate interest in accordance with the declaration. The rate of interest for the SBI SCSS scheme since 01.04.2020 is 7.40% per annum.
  • Interest generated by the SCSS scheme is payable every quarter. In case an account holder does not claim it, such interest does not earn additional interest.
  • The deposit you make at the time of opening your account shall be paid on or after the maturity period. The maturity period can be of five years or eight years upon extension.

The rate of interest under SCSS scheme is in accordance with the Government declaration. The latest SBI senior citizen savings scheme interest rate applicable is 7.4% as notified on 1st July 2020.

Cumulative payment of interest is not done under the SBI Senior Citizen Savings Scheme. The interest is payable at the end of each quarter basis. If you do not withdraw it, there is no further return on it. The first tranche of interest is payable from the date of deposit to the quarter-end.

SBI Senior Citizen Savings Scheme Interest Rate

Financial YearQuartersRate of Interest (%)
FY 2021-22 Q1 to Q3 (April 21 to December 21) 7.4
FY 2020-21 Q1 to Q4 (April 20 to March 21)7.4
FY 2021-19Q4 (January to March)8.6
FY 2021-19Q3 (October to December)8.6
FY 2021-19 Q2 (July to September)8.6
FY 2021-19Q1 (April to June)8.7

Eligibility for SBI Senior Citizen Savings Scheme

There are some basic requirements to avail of the benefits of the SBI Senior Citizens Saving Scheme. You have to ensure that you meet the following criteria to avail of the SCSS scheme:

  • You must be 60 years or above to avail of the scheme.
  • If you are 55 years or more and have retired on superannuation or otherwise, you can apply for the scheme. This rule is applicable upon your age as on the date of opening your account.
  • You may open an individual account or a joint account with your spouse.
  • NRI’s and Hindu Undivided Family (HUF) are not eligible to open an account under the scheme.
  • Retired personnel of Defence Services attaining fifty years of age can also avail the scheme.

Are you looking for alternative options then explore best investment option for senior citizens in India

Advantages of Investing in SBI Senior Citizen Savings Scheme

  • Senior citizens earn regular income through the quarterly payment of interest under the SBI Senior Saving Scheme. It is beneficial for retirees or others who need fixed and regular income to meet their expenditures.
  • The entry age is only 55 years for individuals who have opted for voluntary retirement. However, the retiree must submit the application to avail of the scheme within one month of receiving retirement benefits. Once an account holder locks the interest rate, it remains the same till the maturity of the scheme. This feature protects the account holders from dropping interest rates.
  • There is an option to extend the investment period after a tenure of five years. Hence, in case you are not in need of the lumpsum amount you can extend the account.
  • An account holder can close the account after completing one year of opening it. This way the account is more liquid.
  • There is no penalty if the account holder closes the account after renewal upon completion of five years.
  • An individual can also open more than one SBI Senior Citizens Savings Scheme account. In order to do this, the individual must opt for a joint account with his/her spouse.

Limitations of Investing in SBI Senior Citizen Savings Scheme

  • The SBI Senior Citizens Savings Scheme has an investment limit. An account holder can deposit a maximum of Rs.15 lakhs in an account. Also, all deposits can be in multiples of Rs.1,000 only.
  • A penalty of 1.5% is levied if the account is closed during the first 2 years. The duration is calculated from the date of opening the account.
  • If the account is closed after the first 2 years the penalty levied is 1%.
  • All investments made under the SBI Senior Citizens Savings Scheme are exempt from tax. However, the interest an investor earns under this scheme is taxable. If an account holder earns more than Rs.10,000 in a financial year, TDS is applicable. The income amount is liable for Tax Deducted at Source. This is very inconvenient for senior citizens. They must file tax returns to get a refund of TDS even if they do not have a taxable income or submit a Form 15G or 15H for a lower or no deduction of TDS

Learn: How to File for 15 G

How To Invest in SBI SCSS Scheme?

A Senior Citizens Savings Scheme Account with SBI can be opened at the bank branch or post office. You may visit any deposit office and make an application in Form A. Along with this, you must provide proof of age and deposit a minimum amount in multiples of thousand. You can opt for opening an individual account or a joint account with your spouse.

You can also have more than one account, by opening joint accounts with your spouse. But, the total deposits in all the accounts must not exceed the maximum limit of Rs.15 Lakhs. If the retirement benefits are lower, the amount becomes the maximum deposit limit.

Documents Required to Open an SBI SCSS Account

You can open an SBI Senior Citizen Scheme account at any of its branches. For opening the account the self-attested copies of the following documents are required:

  • Form A
  • A Proof of Identity like passport, PAN card, Aadhar card, etc.
  • Proof of Address like Aadhar card, telephone bill, etc.
  • Proof of Age like Voter ID, birth certificate, etc.
  • Passport size photographs

You can also open the account through any Indian Post Office if you meet the eligibility criteria for SBI SCSS. The applicable interest amount as per the SBI SCSS interest rates will be credited automatically to the linked account. The amount can be withdrawn from the same post office. Investors can gather substantial earnings in 5-8 years through the SBI savings scheme for senior citizens.

Premature Closure Rules for SBI SCSS Scheme

You can withdraw the interest income from the SBI SCSS scheme every quarter.  Withdrawal of the deposited funds is not permissible. For premature closure of an SBI SCSS account, you must make an application using Form E. The premature withdrawal of funds and closure of SBI SCSS accounts can be done any time after 1 year of account opening. 

The closure of the SBI SCSS account is subject to the following conditions-

  • If you close the account before 1 year from the date of opening: You will not earn any interest. The amount already paid as interest will be deducted from the principal amount.
  • If you close the account after 1 year from the opening date but before 2 years: The balance shall be paid after deducting a penalty of 1.5% of the deposit amount.
  • If the account is closed on or after 2 years (but before 5 years) from the opening date: The balance shall be paid after deducting 1% of the deposit.