State Bank of India or SBI offers various types of fixed deposit (FD) accounts. A fixed deposit is considered as a secure form of investment that gives guaranteed returns. Reinvestment plan, one of such product offered by the lender, also works like a fixed deposit (FD). The only difference between the two is that in case of a SBI reinvestment plan, instead of Interest being paid out at a regular frequency during the period of deposit, it is paid out only at the time of maturity. Regular interest is added to the principal and compound interest is calculated and paid thereon, according to SBI's website- sbi.co.in.
Here's all your need to know about SBI reinvestment plan, which is a variant of fixed deposit (FD):
Instalment limit: The minimum instalment that one is required to deposit in SBI reinvestment plan, which is also known as special fixed deposit plan, is Rs 1,000. There is no maximum limit on the investment.
Tenure: The minimum tenure for SBI's reinvestment plan is 6 months and the maximum is 10 years.
Interest rate: The interest rate is same as applicable to SBI's fixed deposits with quarterly compounding. Interest is paid out on maturity only. The following FD interest rates are applicable on deposits below Rs 1 crore, according to the bank's website:
|Tenors||Revised For Public w.e.f. 28.11.2018||Revised for Senior Citizens w.e.f. 28.11.2018|
|211 days to less than 1 year||6.40%||6.90%|
|1 year to less than 2 year||6.80%||7.30%|
|2 years to less than 3 years||6.80%||7.30%|
|3 years to less than 5 years||6.80%||7.30%|
|5 years and up to 10 years||6.85%||7.35%|
Auto renewal: SBI exercises an auto renewal on the reinvestment plan if maturity instructions are not given.
Premature withdrawal: The facility of premature withdrawal is available. For retail fixed deposit up to Rs 5 lakh, the penalty for premature withdrawal is 0.50 per cent. For retail fixed deposit above Rs 5 lakh but below Rs 1 crore, the applicable penalty is 1 per cent. The interest is 0.50 per cent or 1 per cent below the interest rate applicable at the time of deposits for the period deposit remained with SBI or 0.50 per cent or 1 per cent below the contracted rate, whichever is lower. However, no interest is paid on deposits which remain for a period of less than seven days, according to SBI's website.
Tax Deducted At Source (TDS): SBI reinvestment plan is subject to a tax deducted at source. TDS is deducted at the prevalent income tax rate if form 15G/15H is not submitted.
Loan facility: One can avail a loan/overdraft of up to 90 per cent of the deposit amount plus accrued interest, at 1 per cent above the reinvestment plan's interest rate.