SBI introduces Patrons fixed deposit scheme for super senior citizens: Should you invest?

This scheme requires a minimum deposit of Rs 1,000, with a maximum deposit limit of Rs 3 crores. The account can be operated singly or jointly, with the condition that, for joint accounts, the primary account holder must be at least 80 years old. The tenure of the deposit is 7 days to 10 years.

Also read | SBI's Har Ghar Lakhpati RD scheme unboxed: Should you invest or pass?

Comparison with other SBI deposit schemes and bank FDs

SBI offers various other FD schemes offering marginally higher interest rates to senior citizens, including super senior citizens. For instance, SBI's special short-term FD schemes, such as the 444-day Amrit Vrishti (7.75 percent interest rate) and the 400-day Amrit Kalash (7.60 percent interest rate), offer higher interest rates compared to the SBI Patrons Scheme.

According to Lt Col Rochak Bakshi (retd.), Founder of True North Finance, a financial and investment planning firm based in Pune, Bank of Baroda offers higher interest rates of 7.35 percent and 7.75 percent for a one-year and three-years tenure respectively.  In comparison, SBI offers a relatively low interest rate of 7.1 percent for a one-year and 7.6 percent for three-years  tenure.

Know the limitations

One notable drawback of the scheme, according to Amol Joshi, is that the penalty for premature withdrawal is no different from that of regular deposits, which may deter some investors.

At SBI, for deposits in this scheme up to Rs 5 lakh, the interest rate will be reduced by 0.50 percent, while for deposits exceeding Rs 5 lakh, the reduction will be 1 percent from the rate applicable at the time of making the deposit. Deposits that are withdrawn within 7 days of being made will not earn any interest.

While comparing penal charges with the Bank of Baroda, the premature withdrawal policy varies based on deposit amount and duration. For deposits up to Rs 5 lakh that have been held for at least 12 months, there is no penalty for premature withdrawal. However, for deposits that haven't met the 12-month minimum or exceed Rs 5 lakh but are less than Rs 1 crore, a 1 percent penalty is applied to the applicable interest rate. For large deposits of Rs 1 crore and above, the penalty increases to 1.5 percent of the applicable interest rate for the period the deposit was held.

Also read | RBI ombudsman sees a surge in banking complaints. Here’s how you can resolve your grievances

Should you invest?

“Super senior citizens can take advantage of this FD scheme without any limits on their FD allocation, as long as they meet the eligibility criteria,” says Joshi. However, to maximise your returns, it is crucial to compare the interest rates offered by SBI on other special tenure FD schemes till March 31, 2025 and by various banks for super senior citizens, enabling you to choose the bank offering higher returns.

According to Bakshi, "For senior citizens, liquidity is crucial because of potential medical emergencies. Investing in SBI or other nationalised banks provides a safety net." He also warns that while non-banking finance companies (NBFCs) and small finance banks offer higher FD rates, they come with increased risks of liquidity issues and non-performing assets (NPAs), and making deposits over Rs 5 lakh in these institutions is a concern.

Joshi advises caution, saying that individuals without an existing SBI account should not open a new one solely for investing in the Patrons FD scheme. While the interest rate is competitive, the additional administrative burden comes with managing multiple accounts, especially at an advanced age.