India's largest lender State Bank of India (SBI) provides its customers an annuity deposit scheme in which the customers can get a fixed amount every month after depositing a lump sum amount. A fixed amount is provided to the account holder in equated monthly instalments (EMIs), as per SBI official website.
The EMIs comprises a part of the principal amount as well as interest on the reducing principal amount, compounded at quarterly rests and discounted to the monthly value. So, the deposits made by the customers are returned to them in the form of a monthly installment, along with interest.
Minimum amount for SBI annuity scheme
The minimum deposit amount for the SBI annuity deposit is based on a minimum monthly annuity of Rs 1,000 for the relevant period. i.e for three years, the minimum deposit amount will be Rs. 36,000. However, there is no maximum limit. The interest starts on the amount deposited by the customer after a fixed time.
Difference between SBI annuity deposit scheme and Recurring deposit account
The customer makes the payments in installments and receives the maturity amount at maturity date in the Recurring deposit account. Over the tenor selected by the customer, a one-time deposit and that amount plus interest on reducing principal is repaid to the customer in installments under SBI annuity deposit.
Difference between SBI annuity deposit scheme and fixed-deposit account
Customer makes a one-time deposit and receives the maturity amount at maturity date which comprises principal and interest in case of STDR and principal only in case of TDR as interest is paid at a periodic interval in the SBI FD account. SBI annuity deposit accepts one-time Deposit and the amount is repaid to the customer over the tenor selected by him/her, along with interest, in equated monthly installments.
Interest ratesCurrently, SBI gives a 2.9 percent to 5.40 percent interest rate on deposits maturing in seven days to 10 years. These rates are effective from January 8. The rate of interest as applicable to the SBI annuity scheme is the same as SBI FD.