SBI Annuity Deposit Scheme - Interest Rates, Eligibility and Features

By Mayashree Acharya

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Updated on: Mar 25th, 2024

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16 min read

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 2023: 

Tenure

Interest Rates for General Citizens

Interest Rates for Senior Citizens

7 days to 45 days3.00%3.50%
46 days to 179 days4.50%5.00%
180 days to 210 days5.25%5.75%
211 days to less than a year5.75%6.25%
1 year to 2 years6.80%7.30%
2 years to 3 years 7.00%7.50%
3 years to 5 years 6.50%7.00%
5 years to 10 years6.50%7.50%

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 1st 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. 

  • 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 2023

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 2023. Consider avoiding websites that want you to enter your sensitive information or ask for payments for this purpose. 

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. 

Related SBI Articles:
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Other Articles:
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Frequently Asked Questions

Is the SBI annuity deposit scheme good?

The benefits of the SBI Annuity Deposit Scheme might vary between individuals depending on their financial standings. As this scheme accepts investments in lumpsum, consider investing here if you have enough surplus to continue your daily chores. However, this scheme is a fruitful investment instrument for customers looking for decent and regular returns. 

What is the return on the SBI annuity plan?

SBI Annuity Deposit scheme provides monthly returns along with the interest that compound every quarter. The scheme generates returns based on the interest rate and deposit tenure the customer selects. 

How Annuity deposit is different from a Fixed Deposit account?

A fixed deposit account will offer you half-yearly, quarterly or annual returns, which you can avail only after it matures. However, an annuity deposit offers monthly returns throughout the tenure. 

What is the difference between an annuity deposit and a recurring deposit account?

In SBI Annuity Deposit, you must invest in a lump sum to generate monthly returns till the end of tenure. For recurring deposits, you must make deposits in small installments till the maturity period. After which, you will receive the entire maturity amount. 

Who is eligible to invest in the SBI Annuity Deposit Scheme?

Indian residents, minor individuals and senior citizens are eligible to invest in the SBI Annuity Deposit scheme individually as well as jointly. 

What is the minimum and maximum investment amount in the SBI Annuity Deposit Scheme?

The minimum investment amount in the SBI Annuity Deposit scheme is Rs.1,000. However, there is no upper limit for this deposit scheme. 

What are the tenures available for the SBI Annuity Deposit Scheme?

You can invest in the SBI Annuity Deposit Scheme for 36, 60, 84 or 120 months. 

How is the annuity amount calculated?

State Bank of India calculates the annuity amount every quarter and makes repayments in the form of EMIs. 

Can I withdraw my money prematurely from the SBI Annuity Deposit Scheme?

Yes, you can opt for premature withdrawal of your deposits in the SBI Annuity Deposit scheme. However, you must pay a certain premature withdrawal penalty for this. Also, this feature is available only for deposits up to Rs.15,00,000. 

How can I open an SBI Annuity Deposit Scheme account?

To open an SBI Annuity Deposit Account, you must log in to your net banking app, debit your savings, current or overdraft account to the SBI Annuity Deposit scheme and choose the tenure. With this, earn the returns throughout the tenure of this scheme. 

Can I deposit money from other accounts to open an annuity deposit account?

Yes, you can debit money from other savings and current accounts to invest in SBI Annuity Deposit. 

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About the Author

I am an advocate by profession and have a keen interest in writing. I write articles in various categories, from legal, business, personal finance, and investments to government schemes. I put words in a simplified manner and write easy-to-understand articles. Read more

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Quick Summary

SBI offers Annuity Deposit Scheme for regular income through EMIs. Investment tenures range from 3 to 10 years with varying interest rates. There is no minimum investment limit, and customers can nominate beneficiaries. Premature withdrawals are allowed with penalty fees. Eligibility criteria apply, and the scheme is not open to NRI customers. Calculations can be done using compound interest formulas or online calculators.

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