State Bank of India (SBI), the largest lender of the country, offers annuity deposit account, which can be opened by all resident individual including minors. Under SBI's annuity scheme, a lump sum amount is deposited by an investor which is repaid to the customer over a period in equated monthly installment (EMI) which comprises part of principle amount and interest on the reducing principle amount as well, according to SBI's website- onlinesbi.com. Using the scheme, customer can have fixed monthly amount against his/her one-time deposit. The rate of interest is same as applicable to the fixed deposit (FD) account of the term opted by the person.
Here are key things to know about SBI's annuity deposit scheme:
The minimum deposit amount for annuity deposit is based on minimum monthly annuity Rs 1000 for the relevant period. i.e for 3 yrs, minimum deposit amount will be Rs. 36,000. However, there is no maximum limit of deposit amount for SBI's annuity deposit scheme.
The annuity deposit is available for 3 years, 5 years, 7 years and 10 years, according to SBI.
In annuity deposit, as part of the principle and interest on reducing principle is paid in installments over a period of time hence at maturity date, the maturity amount remains zero.
How it differs from recurring deposit (RD) and fixed deposit (FD)
In recurring deposit account customer makes the payments in installments and receives the maturity amount at maturity date while annuity deposit accepts one time deposit and that amount plus interest on reducing principle is repaid to the customer in installments over the tenor selected by him/her.
In case of fixed deposit (FD) account, an investor makes one time deposit and receives the maturity amount at maturity date which comprises principal and interest in case of special term deposit and principal only in case of term deposit as interest is paid at periodic interval. Annuity deposit accepts one time deposit and amount is repaid to the customer over the tenor selected by him/her, along with interest, in equated monthly installments, according to SBI.
The name(s), mode of operation and branch of newly generated annuity deposit account is same as in debit account, from which annuity deposit account is funded. While opening an annuity deposit account, an investor is provided with an option to retain the nominee(s) for deposit account as in debit account from which it is funded.
Get Breaking news, live coverage, and Latest News from India and around the world on NDTV.com. Catch all the Live TV action on NDTV 24x7 and NDTV India. Like us on Facebook or follow us on Twitter and Instagram for latest news and live news updates.