SBI Annuity Deposit Scheme - Interest Rates, Eligibility and Features

State Bank of India (SBI) is a multinational public sector bank offering numerous schemes and financial support to customers. With these, SBI aims to ensure its customers’ financial security and capital growth. 

State Bank of India allows its customers to earn regular income by investing in SBI Annuity Deposit Scheme. This article will take you through the interest rates, eligibility, features, benefits and other information on SBI Annuity Deposit Scheme. 

What Is SBI Annuity Deposit Scheme?

SBI Annuity Deposit Scheme requires customers to deposit a one-time lumpsum amount to the bank. The SBI will repay this amount periodically as Equated Monthly Installments. These EMI amounts comprise a portion of the principal amount and interest. The interest compounds quarterly and discounts returns on a monthly value. 

Also known as monthly annuity installments, you can invest in this scheme for tenures of three, five, seven or ten years. 

SBI Annuity Deposit Scheme Interest Rate 

The table below displays SBI Annuity Deposit scheme interest rates for 2024: 

Features Of The SBI Annuity Deposit Scheme

• You can invest in this scheme from any branch of SBI in India. 
• The minimum investment amount in this scheme is Rs.1,000.
• There is no upper limit on the maximum deposit amount for this scheme. 
• You can nominate individuals to receive the returns from the SBI Annuity Deposits scheme in your absence. 
• Investors need to deposit a lump sum amount, after which they will earn repayments every month. The returns comprise the principal amount and the interest. 
• In case of non-existent dates, you will receive the returns on the 1^st of the following month. 
• Investors receive a universal passbook for this scheme and their term deposit investments. 
• You can choose a period of deposit between 36, 60, 84 or 120 months. 
• The bank is bound to grant overdraft or loan facility for 75% of the annuity deposit balance amount for special cases. 
• The bank allows premature payments up to Rs.15,00,000 for term deposits. However, SBI will charge a certain penalty fee for premature payments. 

Components Of The SBI Annuity Scheme

Let’s take a look at the components of the SBI Annuity Deposit scheme in the points given below:

• Interest Rate

The interest rates for this scheme depend on the investment tenure that a customer opts for. In the case of this deposit scheme, one-tenth of this annuity scheme’s percentage point is equal to one basis point. 

• Eligibility

All Indian residents, including minors, can start investing in the SBI Annuity Scheme. However, NRI individuals are not eligible to invest in this scheme. 

• Taxation

You must pay TDS charges for the returns which you will earn by investing in the SBI Annuity Deposit Scheme. The bank rounds off the interest to the next rupee value; this might result in the last annuity installment to differ. 

• Premature Payment

This scheme allows premature payment of installments in the event of an investor's death within the ongoing tenure. Legal heirs of the deceased or joint account holders are eligible to receive the returns of this scheme after the investor’s death. 

• Loan Facility 

An investor can get an overdraft or loan of up to 75% of the annuity balance amount in special cases. After the disbursement of the loan, periodic annuity payments will be put in the investor's loan account.

• Maturity Amount

The banks pay principal and interest on the reduced principal throughout a period. This brings down the maturity amount to zero at the end of the maturity period. 

Eligibility For The SBI Annuity Deposit Scheme

• Resident Indian citizens, including minors, can invest in this scheme with single or joint accounts. 
• Customers belonging to the NRE or NRO category cannot start deposits under the SBI Annuity Deposit scheme.  

Benefits Of The SBI Annuity Scheme

• The interest rates for this scheme are similar to SBI’s term deposits. Investors can choose the interest rates depending on their investment tenure. Senior citizen investors will receive an additional rate of interest as well. 
• The bank will make the full payment in advance in case of the death of the depositor. 
• The depositor will receive a loan facility of up to 75% of his/her total amount. 
• There is no maximum deposit limit for SBI Annuity scheme deposit. 

SBI Annuity Deposit Scheme Example

The SBI Annuity Deposit Scheme allows investors to deposit a lump sum amount to generate regular returns. As an investor, you will receive the returns from this scheme as EMIs.

Let’s consider a simple SBI Annuity Deposit scheme example to understand how this scheme works. 

For instance, Mr. Mitra started an SBI Annuity Deposit Scheme with Rs.50,000 for 5 years. Keeping this in mind, the bank will offer an interest rate of 6.50%. As per the definition above, the bank will compute the compound interest and provide returns as EMI. This EMI will carry components of the reducing principal and the interest calculated on the outstanding amount. The calculation of the example in shown in the next section.

How Is The SBI Annuity Deposit Calculated?

Let’s consider the above example to understand how SBI Annuity Deposit is calculated.

State Bank of India calculates quarterly interest using the formula below to generate monthly returns.

The formula to calculate SBI Annuity Deposit monthly income is as follows. 

A = P (1+r/n) ^ (n * t)

Here is A= Maturity amount

P= Principal amount

R= Rate of interest 

N= number of times the interest will compound in a year

T= Total tenure

Now, let’s place the values in the example as per the formula: A = P (1+r/n) ^ (n * t)

A= 50,000*(1+ 0.065/4)^(4*5)

According to this, Mr Mitra will generate a total interest of Rs.19,021 on his principal amount of Rs.50,000. This means he will receive a  total return of Rs.69,021. Now, the SBI Annuity Deposit scheme promises to provide monthly repayments on the principal amount. This means Mr. Mitra will receive Rs.1,150 every month till the end of his tenure. After the end of 5 years, his maturity amount will reflect as 0. 

SBI Annuity Deposit Scheme Calculator 2024

Before going ahead with the investment procedure for the SBI Annuity Deposit Scheme, consider computing the expected returns beforehand. This will help you clearly understand how much funds you must invest in the scheme for a better financial future. 

You can calculate the returns manually using the compound interest formula. However, manual calculations can become time-consuming and leave room for errors. Therefore, to avoid this and save your time and effort, you can also explore the option to calculate your returns online. 

You will find several free annuity deposit scheme calculators available online to execute this. All you need to do is fill in the values to receive accurate and instant results. You can compute the returns with infinite combinations of data and choose the right investment amount that offers returns as per your requirements. 

Ensure you use a credible website for SBI Annuity Deposit Calculator 2024. Consider avoiding websites that want you to enter your sensitive information or ask for payments for this purpose. 

Comparison of Top Banks FD Rates 

Conclusion

Like fixed deposits, the SBI Annuity Deposit Scheme is a fitting investment instrument for investors looking for regular income for the long term. This scheme is also suitable for investors with low-risk appetite. Finally, the interest rates for this scheme are subject to frequent changes; therefore, consider checking the updated interest rate always before applying. 

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