There are many schemes and financial products available for investors to earn a decent return from their money. Banks in India offer different options according to the amount a customer can utilise for depositing in a particular scheme.
The State Bank of India Annuity Deposit Scheme is one such deposit scheme. But before delving into the details, first knowing what is an annuity deposit is important.
What is an Annuity Deposit?
Under this scheme, a lump sum amount is deposited by a customer which is repaid to the customer over a period in equated monthly instalment which comprises part of principal amount and interest on the reducing principal amount as well. According to the information available on the official website of SBI, using the scheme a customer can have a fixed monthly amount against his one time deposit.
Is Annuity Deposit different from Recurring deposit account?
Yes. In Recurring deposit account the customer makes the payments in instalments and receives the maturity amount at maturity date while annuity deposit accepts one time deposit and that amount plus interest on reducing principal is repaid to the customer in instalments over the tenor selected by him / her.
How is an Annuity Deposit different from a Fixed deposit account ?
In Fixed Deposit account customers make one time deposit and receive the maturity amount at maturity date which comprises principal and interest in case of Special Term Deposit Rate and principal only in case of Term Deposit Rate as interest is paid at periodic intervals.
Annuity Deposit accepts one time deposit and amount is repaid to the customer over the tenure selected by the person, along with interest, in equated monthly instalments.
SBI Annuity Deposit Scheme
SBI defines its Annuity Deposit Scheme as, to enable the depositor to pay one-time lump sum amount and to receive the same in Equated Monthly Instalments (EMIs), comprising a part of the principal amount as well as interest on the reducing principal amount, compounded at quarterly rests and discounted to the monthly value.
To enable the customer to deposit a one-time lump sum amount and receive repayment of the same in monthly annuity instalment comprising part of the principal amount plus interest.
What is the Rate of interest under SBI Annuity Deposit Scheme?
Rate of interest is applicable to Term Deposits for the general public and senior citizens.
When does the payment start under the Annuity Deposit Scheme?
Deposit amount based on minimum monthly annuity of Rs 1000/- for the relevant period. Payment will start on the anniversary date of the month. If the date is non-existent (29th, 30th and 31st), it will be paid on the 1st day of next month.
Period of deposit: 36/60/84 or 120 months
Is premature payment allowed under SBI Annuity deposit scheme?
Premature payment allowed for the deposits up to Rs 15,00,000. However, penalty charges are applicable.
In case of death of a depositor, premature payment is allowed without any limit.
Interest payable will be subject to TDS for Annuity Deposit.
SBI has laid down detailed instructions on its official website for the purpose of awareness. Customers can check the latest update relevant for the Annuity Deposit Scheme before applying for the same.
Read all the Latest Business News here