State Bank of India launched SBI senior citizen fixed deposit scheme (FD) in 2020. The plan is meant for senior citizens of the country. From May 2020, the scheme is available for investment. The last date to invest in the program is 30 September 2022.
According to the SBI, the plan was launched to provide senior citizens with higher interest rates in the current event of lowering interest rates because this category of investors is usually dependent on interest income.
The launch of this FD plan came after many banks cut fixed deposits and savings account interest rates because the Reserve Bank of India (RBI) lowered the repo rate and reverse repo rate.
SBI FD Scheme
The senior citizen fixed deposit scheme offered by the State Bank of India (SBI) is a saving plan for citizens above 60.
Investors under this plan can deposit one thousand (1000) rupees or any amount in multiples of one thousand rupees not exceeding Fifteen lakhs (15) lakes.
After the five-year maturity, investors can extend this deposit plan for three more years.
Eligibility for SBI Senior Citizen Fixed Deposit Scheme
The plan is available for the citizens living in India. Resident citizens of India who are sixty years and above can invest in this FD scheme. NRI citizens are not allowed to invest in this FD scheme.
Tenure Period for the Fixed Deposit Scheme
The minimum tenure of investment made under this senior citizen fixed deposit scheme is five years, and the maximum is ten years. So an investor can invest in the scheme for a five or ten-year period.
Senior Citizen Fixed Deposit Interest Rates
According to the scheme details available on the State Bank of India’s website, the investment made under this scheme will get 0.8 more interest than the interest rate applicable to the general public.
For example, from January 08, 2021, the interest rate for the general public on fixed deposits for five years is 5.40 percent.
But for senior citizens who invest and put deposits under this fixed deposit plan, the interest rate will be 6.20 percent.
According to the State Bank website, a premium of 30 bps is added to the fixed deposit scheme (above the current premium of 50 bps) over the general public interest rate.
It means that any future revision of the fixed deposit interest rate applicable to the general public will likely affect the interest rates applicable to the senior citizen fixed deposit scheme (1%=100 points).
How Interest is Paid Under this Scheme?
Under the senior citizen fixed deposit scheme, the interest on investments will be paid on a monthly or quarterly basis.
It is not clear in the details about the plan available on the State Bank website whether senior citizens who invest in the scheme have an option to receive interest amount half-yearly or yearly basis.
The State Bank also did not explain whether investors could choose the option of accumulated interest rate on FD amount. Generally, for accrued options, interest is usually paid on fixed deposits with the principal amount at the time of maturity.
Please note that the bank will deduct the taxes from the interest, which is credited into the investor’s bank account. For senior citizens, if the total interest amount is more than Rs 50,000-00 in a financial year, tax deducted at source (TDS) will be deducted.
The amount of interest on all fixed deposits, recurring deposits, or other deposits with the bank will be calculated for TDS purposes. Interest transferred to a savings account is not subject to TDS.
How to Invest in Senior Citizens FD Scheme SBI?
A senior citizen who wants to invest in the SBI senior citizen fixed deposit scheme can deposit money by visiting a State Bank branch and fulfilling the necessary documentation for this purpose.
Citizens who are already customers of the SBI can get the fixed deposit scheme with net banking or through the Yono online application of the bank.
Last Date of the Fixed Deposit Scheme
SBI senior citizens fixed deposit scheme was launched on 12 May 2020. The last date to invest in this FD scheme is 30 September 2022.
SBI Senior Citizen Fixed Deposit Scheme Form
You can download the FD scheme application form from retail.onlinesbi.com. Complete the required fields and submit the form if you want to invest in the scheme.
Loan Against the FD
As per the scheme details available on the SBI website a senior citizen can get a loan against his FD amount invested in the scheme in the event of an emergency. Thus availing of a loan against fixed deposits is possible.
Premature Withdrawal of the Fixed Deposits
According to the State Bank of India’s notice, if any investor who invested in this scheme withdrawal the fixed deposits before the scheme’s maturity, he will not get the additional interest, i.e., 30 bps under this scheme.
Therefore opting for premature withdrawal of fixed deposits under the plan, an investor’s fixed deposit investment will receive only 0.50% above the interest rate applicable to the general public, i.e., 5.90 percent.
Investing in SBI Fixed Deposit Scheme
As a senior citizen, if you are looking for good returns and the safety of your invested amount, then other investment options are also there that offer high-interest rates compared to SBI fixed deposit scheme.
For example, the post office senior citizens saving scheme (SCSS) currently offers interest at 7.4% per year. The difference between the interest rate of the SBI fixed deposit scheme and post office SCSS is 1.20%.
SCSS allows an investor to withdraw the invested amount prematurely by paying some penalty. The maturity period of SCSS is also five years.
According to SCSS rules, no interest will be paid to the investor if the investor closes the account before one (1) year. If interest is already paid will be recovered.
An amount equal to 1.5 percent of the deposited amount will be deducted if the account is closed after one year. Similarly, 1 percent of the deposited amount will be deducted if the SCSS account is closed after two (2) years. In SCSS, you can deposit a maximum of Rs. 15 lakhs.
Different Scheme’s Interest Rates Available to Senior Citizens
|Name of the Scheme||Rate of Interest|
|State Bank of India special FD scheme||6.20%|
|Post office SCSS (senior citizens savings scheme)||7.40%|
|Monthly income scheme of India post||6.60.%|
|5 years time deposit scheme of the post office||6.70%|
|RBI floating rate taxable bonds||7.15%|
|PMVVY (Pradhan Manrti Vaya Vandana Jojana||7.40%|
The State Bank of India started the unique FD scheme in May 2020 to provide reasonable returns for senior citizens. The SBI senior citizen fixed deposit scheme offers an interest rate of 80 basis points (bps). This interest rate is above the interest rate that the bank provides to the general public.
Currently, the State Bank of India provides a 5.4 percent interest rate on five-year fixed deposits for the general public. But the fixed deposit scheme offers senior citizens a 6.20 percent interest rate—other plans for senior citizens like the post office savings scheme also yield good returns.