SBI Annuity Deposit Scheme

What is the SBI Annuity Deposit Scheme?

The SBI Annuity Deposit Scheme is a program offered by SBI that allows you to invest a lump sum of money upfront and receive regular monthly payouts over a fixed period. These monthly payments are called annuities, and they combine a portion of your principal amount along with interest earned on the reduced balance. The interest compounds quarterly but is paid out monthly. You can choose a term of three, five, seven, or ten years for the scheme.

Here’s how it works:

• You deposit a lump sum of one time with SBI.

• SBI pays you back in fixed monthly instalments over your chosen tenure.

• Each instalment combines the principal amount and interest.

• The interest compounds quarterly but is paid out monthly.

• You can choose a deposit term of 3, 5, 7, or 10 years.

Features of the SBI Annuity Deposit Scheme 

Features of the SBI Annuity Deposit Scheme are: 

1. Accessible throughout India

   Invest from any SBI branch in the country.

2. Minimum Investment

   Start with a small amount of Rs. 1,000.

3. No Upper Limit

   Invest any amount you like, there's no maximum cap.

4. Regular Income

   Earn monthly payouts that combine your principal amount and interest earned.

5. Flexible Terms

   Choose your deposit tenure from 3, 5, 7, or 10 years.

6. Convenient Payment Dates

   Receive payouts on the anniversary of your deposit month or the 1st of the following month if the date doesn't exist.

7. Universal Passbook

   Track your annuity and term deposit investments in one place.

8. Nomination Facility

   Appoint a beneficiary to receive your returns in case of your absence.

9. Overdraft/Loan Facility (Subject to Approval)

   The bank may grant an overdraft or loan for up to 75% of your deposit balance in special circumstances.

10. Premature Withdrawal (up to Rs. 15 Lakhs)

    Access your funds before maturity, but a penalty fee may apply.

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What are the Components Of The SBI Annuity Scheme?

The SBI Annuity Scheme comprises several key components that investors should be aware of:

1. Interest Rate

   The interest rates under this scheme are determined based on the chosen investment tenure. Each percentage point in this annuity plan is divided into ten parts, known as basis points.

2. Eligibility

   Indian residents, including minors, can invest in the SBI Annuity Scheme. However, Non-Resident Indians (NRIs) cannot participate in this scheme.

3. Taxation

   Investors are subject to TDS (Tax Deducted at Source) charges on the returns earned from the SBI Annuity Deposit Scheme. The bank rounds off the interest to the nearest rupee, potentially affecting the final annuity instalment.

4. Premature Payment

   In the unfortunate event of the investor's demise during the tenure, premature payment of instalments is permitted. The legal heirs or joint account holders can receive the scheme's returns after the investor's death.

5. Maturity Amount

   The scheme pays out principal and interest based on the reduced principal amount over time, ultimately resulting in a maturity amount of zero at the end of the maturity period.

Eligibility Criteria Under The SBI Annuity Scheme

• Anyone who is looking to invest in an SBI annuity scheme should be a resident individual, which could also include a minor. 

• The mode of holding could be joint or single.

• Any customer falling into the category of NRE and NRO cannot access this facility.

SBI Annuity Deposit Scheme Interest Rates 2025

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Benefits of the SBI Annuity Deposit Scheme

Below are the benefits of the SBI Annuity Deposit Scheme: 

1. Competitive Interest Rates

   The scheme offers interest rates comparable to SBI's term deposits, providing investors with a reliable and stable source of income.

2. Flexibility in Interest Rates

   Investors can choose from different interest rates based on their investment tenure, allowing them to tailor their investment strategy to their financial goals or retirement planning.

3. Additional Benefits for Senior Citizens

   Senior citizen investors receive an extra interest rate, enhancing their returns and providing a cushion against inflation.

4. Insurance Coverage

   In the unfortunate event of the depositor's death, the bank will make the full payment in advance, ensuring that the depositor's family or beneficiaries receive the entire amount without any hassle.

5. Loan Facility

   Depositors can avail themselves of the loan facility for up to 75% of their total deposit amount, providing them with liquidity and financial flexibility when needed.

6. No Maximum Deposit Limit

   There is no upper limit on the amount that can be deposited under the SBI Annuity Deposit Scheme, allowing investors to invest according to their financial capacity and goals.

How is the SBI Annuity Deposit Calculated?

The State Bank of India uses the formula provided below to compute quarterly interest, resulting in monthly returns.

The formula to calculate SBI Annuity Deposit monthly income is:

SBI Annuity Deposit Example

To understand how the SBI Annuity Deposit Scheme works, let’s consider an example.

Mr. Sharma decides to invest ₹1,00,000 in the SBI Annuity Deposit Scheme for a tenure of 7 years. The bank offers him an interest rate of 6.75% per annum.

The bank calculates compound interest quarterly and provides Mr. Sharma with equal monthly installments (EMIs). Each EMI consists of both interest and principal components.

SBI Annuity Deposit Calculation

The formula used:

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

Here is A= Maturity amount

P= Principal amount (₹1,00,000)

R= Rate of interest (6.75% or 0.0675)

N= number of times the interest will compound in a year (4 times)

T= Total tenure (7 years)

Using this formula, the total maturity amount Mr. Sharma will receive over 7 years is ₹1,64,500, with ₹64,500 as total interest.

As per the annuity scheme, Mr. Sharma will receive a monthly payout of ₹1,955, which includes both interest and principal, until the end of his tenure. After 7 years, the maturity amount will be ₹0.

SBI Annuity Deposit Scheme Calculator 2025

If you're considering investing in the SBI Annuity Deposit Scheme, it's important to calculate your expected returns beforehand. While manual calculations using the compound interest formula are possible, they can be time-consuming and prone to errors.

To streamline this process and save time and effort, you can use an online calculator specifically designed for the SBI Annuity Deposit Scheme. The SBI Annuity Deposit Calculator is readily available online and is free to use. By inputting the relevant values, you can obtain accurate and instant results, allowing you to explore various investment scenarios and select the right investment amount that aligns with your financial goals.

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Conclusion

The SBI Annuity Deposit Scheme is a well-rounded option for individuals seeking a steady stream of income.  With its accessible investment requirements, flexible terms, and nomination facility, it tries to meet various financial goals. Whether you're planning for retirement or simply want to create a predictable income source, the SBI Annuity Deposit Scheme offers a secure and convenient solution.