Investment in a fixed deposit (FD) scheme is often considered safer as compared to investing in other investment options. Fixed deposit schemes allow people to invest money for a designated period, post which a fixed rate is to be paid for the deposit period. Union Bank of India’s fixed deposit scheme offers great returns upon maturity.
1. Fixed Deposit Interest Rates 2020 of Union Bank of India
Please note that the interest rates provided in the table below are applicable for a deposit amount up to Rs.2 crore and are effective from 1 September 2020.
|Fixed Deposit Tenure
||Interest Rate for Regular Customers (% p.a.)*
||Interest Rate for Senior Citizens (% p.a.)*
|7 to 14 days
|15 to 30 days
|31 to 45 days
|46 to 90 days
|91 to 120 days
|121 to 180 days
|181 days < 1 year
|>1 year to 3 years
|>3 years to 5 years
|>5 years to 10 years
*Interest rates are subject to change.
2. Different Types of Union Bank of India FD Schemes
- Union Non-Callable Term Deposits Scheme:The scheme is available for deposits above Rs.2 crore (single deposits only). Deposit Reinvest Certificate, Fixed Deposit Receipt and Short Deposit Receipts are the types of deposits available under the scheme. The deposit tenure available here is from 61 days up to three years. Premature withdrawal is only allowed in the case of specified extra ordinary situations.
- Motor Accident Claims Annuity Deposit (MACAD):This scheme is meant for depositing a one-time lump sum in the account as prescribed by the court or tribunal. The deposit sum will be paid out to the individual in equated monthly instalments (EMI), which consists of a part of the principal and interest. The tenure is 36 to 120 months. The minimum monthly annuity associated is Rs.1,000 for the relevant period.
- Capital Gain Scheme:This scheme abides by the Capital Gain Account Scheme, 1988, as stated by the Ministry of Finance. Taxpayers can avail the benefit of exemption from capital gains by depositing the amount of capital gains or the net consideration in this account before the due date for filing IT returns.
- Easy Tax Saver Deposit Scheme:This tax-saver FD scheme allows you to make deposits through monthly instalments, lump sum, or as and when you have surplus funds for investing. You can deposit money in small bits throughout a financial year and get IT exemptions under Section 80C. The maximum deposit limit for this account is Rs.1.5 lakh.
- Union Tax Saver:This is the general tax-saver FD scheme where the deposit sum will get exemption under Section 80C of the Income Tax Act, 1961. The scheme comes with a lock-in period of five years, and the tenure can go up to 10 years based on your requirement. A minimum amount of Rs.5,000 is required to make the deposit and in multiples of Rs.1,000 thereafter. You can deposit up to Rs.1.5 lakh.
- Money Flex Term Deposit (MFTD):The Money Flex Term Deposit scheme offers higher returns along with the flexibility of withdrawing a part of the deposited sum at any time before maturity. Single and joint accounts can be opened. The minimum period is six months, and the maximum period is 10 years. A minimum deposit of Rs.25,000 is necessary to open the account.
- Deposit Reinvestment Certificate (DRIC):The interest on the amount deposited in this scheme gets compounded quarterly and will be paid along with the principal. The minimum deposit to open this account is Rs.1,000. There is no upper limit on the deposit money.
- Monthly Income Scheme (MIS):The scheme is suitable for those who wish to get regular fixed income with guaranteed returns at a specified rate of interest every month. The minimum period is 12 months and can go up to 120 months. The minimum deposit amount is Rs.1,000.
- Fixed Deposit Receipt (FDR):This account works similar to a regular FD account with the minimum deposit amount being Rs.1,000. However, in the case of depositing subsidies received from the government-sponsored schemes, margin money, earnest money, and court attached/ordered deposits, minimum deposit criteria is not applicable. The deposit tenure can be from six months up to 120 months.
- Short Deposit Receipt (SDR):The minimum deposit amount for the scheme is Rs.1,000. The tenure can range from 7 days to 179 days. The interest is calculated in quarterly intervals and paid half-yearly, i.e. in March and September depending on the date of maturity.
- Short Term Bank Deposit Scheme (STBD): The bank offers this scheme under the “Gold Monetization Scheme (GMS)”. It intends to mobilise gold held by households and institutions and facilitate its use for productive purposes. The scheme aims to reduce the import of gold in the long run. The principal and interest of this scheme are denominated in gold. The minimum deposit for this account is raw gold equivalent to 30 gram with 995 fineness.
3. Union Bank of India FD Special Features and Benefits
- The minimum amount required to open an FD account is Rs 1,000. This may vary based on the scheme you choose.
- Competitive interest rates are offered against all FD schemes.
- The deposit tenure ranges from 7 days up to 10 years.
- Easy and fast liquidity options are available.
- Customers can avail loan facility up to 90% of the FD amount on certain schemes.
- No penalty is charged for premature closure of the account subject to certain conditions.
- No interest is provided if the account is closed within seven days of opening.
- Senior citizens get 0.5% higher rates as compared to regular customers.
- Nomination facility is available.
- Automatic renewal facility is available. That is the account will be renewed for the same tenure, upon maturity of the first cycle, at the prevailing rates.
4. Basic Eligibility Criteria for Union Bank of India FD
Here is a list of eligible candidates to open an FD account with Union Bank of India. However, it may vary for certain schemes:
- Joint accounts for two or more individuals
- Partnership firms
- Blind persons
- Illiterate persons
- Joint Hindu families
- Limited companies and partnership firms
- Municipalities and panchayats
- Charitable, religious, and educational institutions
- Associations, societies, clubs, etc.
- Sole proprietary concerns
- Proof of Identity
- PAN card
- Voter ID
- Driver’s license
- Aadhaar card
- Proof of Address
- Aadhaar card
- Bank statement with a cheque
- Proof of Date of Birth
- Service discharge certificate
- PAN card
- Aadhaar card
- Voter ID
5. Tax Benefits on Union Bank of India Fixed Deposit
Union Bank of India offers two tax-saver deposit schemes:
- Easy Tax Saver Deposit Scheme:The bank offers a flexible tax-saver FD scheme that allows you to make deposits in monthly instalments (standing instructions), single lump sum, or as and when you get surplus funds at hand for depositing. You can choose the payment method you are comfortable with and make payments throughout a financial year and still get IT exemption under Section 80C of the Income Tax Act, 1961. Any deposit made will be locked-in and swept out for five years. All individuals and HUFs who have PAN are eligible to deposit money in this product.
- Union Tax Saver Scheme:This is the general tax-saver FD scheme that requires you to deposit a lump sum to avail IT benefits under Section 80C of the Income Tax Act. Individuals and HUFs having PAN can open this account. The account can have a single holder or joint holder. The minimum deposit tenure is five years, and the maximum term can go up to 10 years. A lock-in period of 5 years is applicable to this account. The deposit can be from Rs.5,000 up to Rs.1.5 lakh. TDS will be deducted as per the prescribed guidelines.
If the interest earned on your fixed deposit is more than Rs 40,000 during the financial year, the bank deducts tax at source @ 10%. This rate has been reduced to 7.5% due to COVID-19 pandemic during the period from May 2020 to March 2021. Further, the tax levied on the returns is dependent on the tax bracket you fall into irrespective of the interest rate or other factors.
6. FD Interest Rate Calculator
Our easy-to-use FD calculator page helps you predict the returns you may receive upon depositing your money in a FD account.
7. Frequently Asked Questions (FAQs)
Q. How are interest rates decided for fixed deposit accounts of higher value?
A. The interest rates for high-value FD accounts are decided based on the aggregate value of deposits placed by a person on the same day for an identical tenor.
Q. Where can I find the interest rates for FD with a deposit amount above Rs.2 crore?
A. The bank has not listed the interest rates for FDs with a deposit amount above Rs.2 crore.
Q. How is the interest calculated and when is it credited?
A. Interest is calculated on a daily product basis. It is credited once a quarter, i.e. in April, July, October, and January every year.
Q. How does the penalty on premature closure work?
A. For deposits less than Rs.2 crore, if the account was active for a minimum period of 7 days, then the interest will be paid for the period the account remained active at 1% less than the agreed-upon rate or the contracted rate, whichever is lower.
However, this rule is not applicable for Flexi Term Deposits, Money Flexi Term Deposits, and bank induced closure of term deposits. Also, a penalty applies only to NRO deposits and not on NRE and FCNR deposits.