Fixed Deposits (FD) are an essential mode of investment which enable one to secure their earnings and ensure consistent growth in savings. The State Bank of India (SBI) offers an extensive range of investment opportunities to its customers. The SBI Fixed Deposit schemes are held by rewarding interest rates that ensure high returns upon maturity. An investor can choose a tenor that falls within 7 days to 10 years. FD is considered as a safe and risk-averse investment as it is unaffected by market fluctuations.
SBI offers FDs at competitive interest rates that range from 5.75%-6.75% for the general public. Senior citizens receive an interest rate that is higher by 0.50% than the regular rates. Individuals who are employees of SBI or are retired SBI employees are eligible for a 1% higher interest rate.
SBI FD interest rates for deposits below Rs. 1 crore as updated in July, 2018:
| Tenure | Regular Interest Rates | Senior Citizen Interest Rates |
|---|---|---|
| 7 days-45 days | 5.75% | 6.25% |
| 46 days-179 days | 6.25% | 6.75% |
| 180 days-210 days | 6.35% | 6.85% |
| 211 days < 1 year | 6.40% | 6.90% |
| 1 year < 2 years | 6.65% | 7.20% |
| 2 years < 3 years | 6.65% | 7.25% |
| 3 years < 5 years | 6.70% | 7.30% |
| 5 years-10 years | 6.75% | 7.35% |
*For deposits less than Rs.1 crore
The highest rates of interest of 6.75% and 7.35% are offered to the general public and senior citizens for a tenor of 5-10 years. Investors can either opt for a short-term deposit or go for longer tenors. The interest rates of SBI FD increase corresponding to the duration of the tenor.
SBI offers an online service called the Maturity Value Calculator through its official website. Potential investors can get an estimate of the returns that they would receive on any SBI FD scheme that they are considering.
The FD calculator can be utilized by following these simple steps:
It must be noted that interest is compounded on a quarterly-basis. This FD calculator enables a customer to choose an SBI FD plan that gives the maximum returns within a tenor that is ideal for an investor’s needs.
The eligibility bracket to open an SBI FD account is identical to that of an SBI savings account. Any individual with a valid Aadhaar card and a Permanent Account Number (PAN) card or Form 60 as a KYC document, can apply for an FD account.
SBI offers a range of term deposit schemes to invest in.
The list of SBI FD schemes are noted below:
Any individual who is an Indian resident or is the Karta of the Hindu family undivided family and has a Permanent Account Number (PAN) can avail the SBI Tax Savings scheme. The tenor for the deposit can be within the range of 5-10 years. The lower limit for deposit is Rs.1,000, while the upper cap is Rs.1,50,000 p.a. The rates of interests correspond to the regular FD rates. Tax benefits can be availed as prescribed under the Section 80C of the Income Tax Act, 1961. An account holder can opt for the nomination facility but cannot undertake premature withdrawals. Furthermore, the account holder cannot apply for a loan against the deposit.
The SBI MOD is a variant of term deposits. These deposits are linked to the savings account of an individual and the pledged funds are highly liquefiable. Any deficit in an account holder’s savings account will be compensated by transferring funds from the MOD account. The remaining amount in the MOD account will earn interest as agreed upon while opening the deposit account. One needs to park a minimum of Rs.10,000 to open an MOD account. The tenor lasts between 1-5 years. Premature withdrawals are permitted with a corresponding penalty for the same. The interest income is subject to Tax Deducted at Source (TDS). The scheme also comes with a nomination facility.
Reinvestment scheme is a kind of term deposit which provides the accumulated interest income only upon maturity. The interest rate is identical to the regular FD rates which get compounded on a quarterly basis. TDS is applicable to the interest income. The tenor lasts between 6 months and 10 years. This SBI FD scheme comes with a premature withdrawal facility. Any withdrawal before 7 days receives no interest. The penalty for a deposit below Rs.5 lakh is 0.50% and any deposit between Rs.5 lakh and Rs.1 crore gets a penalty of 1%. SBI offers loan against deposit and overdraft facility on this term deposit.
This deposit scheme availed by SBI allows for an account holder to invest a certain amount of money on a monthly basis. Unlike a Recurring Deposit, the size of the instalments is not fixed along with the frequency of investment in a month. The lower limit of an instalment is Rs.500. The balance limit for a financial year lies between Rs.5,000 and Rs.50,000. The tenor for the scheme ranges between 5-7 years. An investor can apply for premature withdrawal and the rate of interest will be 0.50% than the original rate. TDS will be applied to the interest. Facilities like nomination and loan against deposit are available as well. The rate of interest is identical to regular FD rates.
SBI has introduced this deposit scheme in which the investor parks a certain amount of money and receives payouts as Equated Monthly Instalments (EMI). The payouts consist of interest that is compounded on a quarterly basis and a portion of the principal amount. Every instalment sees the interest of the diminishing principal amount. The interest rates are same as the regular SBI FD rates. The lower limit for monthly annuity is Rs.1,000 and the deposit should be above Rs.25,000. The tenor could be either 36 months, 60 months, 84 months or 120 months. Premature payment is allowed only after the demise of the account holder. SBI provides overdraft facility and loans against the deposit and the annuity payment that follows goes into the repayment of the loan.
The following table shows the tenor duration and the limit of deposit that are available for SBI FD schemes:
| Deposit Scheme | Tenure | Balance Limit (in rupees) |
|---|---|---|
| SBI Tax Savings Scheme, 2006 | 5-10 years | 1,000-1.5 lakh |
| SBI MOD | 1-5 years | 10,000-no upper cap |
| Reinvestment Scheme | 6 months-10 years | 1,000-no upper cap |
| SBI Flexi Deposit Scheme | 5 years-7 years | 5,000-50,000 |
| Annuity Deposit Scheme | 3 years, 5 years, 7 years or 10 years | 25.000-no upper cap |
An individual can open an FD account in SBI by visiting the nearest SBI branch and filling out an application form. This would require KYC documents such as one’s Aadhaar Card as well as a Permanent Account Number (PAN) Card. To apply for schemes such as the SBI Multi Deposit Scheme (MOD), it is necessary to have a pre-existing savings account in SBI. One can also create an FD account online.
The steps given below can be followed to create an SBI FD account online:
SBI offers tax saver fixed deposit called SBI Tax Saving Scheme, 2006. The interest rates are identical to regular SBI FD rates. A minimum of Rs.1,000 has to be deposited in order to open this term deposit account. The maximum amount that can be deposited is Rs.1.5 lakh. Investors can enjoy the tax benefits on the income interest as dictated under Section 80C of the Income Tax Act, 1961. The tenor lasts between 5 years-10 years. SBI does not permit premature withdrawal under this scheme.
The interest income gained on the SBI term deposits are susceptible to Tax Deducted at the Source (TDS). TDS is applicable if the interest income on an investment exceeds Rs.10,000 in a financial year. If an investor’s regular incomes falls below the taxable limit, they can produce the Form 15G/15H to gain tax exemptions.
The SBI term deposits promise high returns at competitive rates of interest. The FD variants include tax-saving schemes as well as the MOD scheme which enable funds to be liquefiable.
The following indicate the important characteristics of SBI FD schemes:
A select number of SBI term deposits such as the Reinvestment Scheme, SBI MOD and Annuity Deposit Scheme offer loans against the deposit. An investor of the reinvestment scheme can avail this facility for 90% of the deposit value whereas; Annuity Deposit Scheme permits this facility for 75% of the deposit value.
An individual can apply for the SBI Advantage Plus credit card against a term deposit account in SBI. In case one does not have a term deposit account, they can apply for the credit card along with the SBI Fixed Deposit Form. The credit card will be issued after the verification of the necessary KYC documents. Post the payment of the annual charges and the joining fees, the account holder can choose from the Encash facility of either Rs.25,000 or Rs.50,000. The chosen amount would be treated as the deposit to open the FD. Monthly EMIs will be charged for 11 months based on the selected amount. The account holder will receive an interest of 9.25% p.a. for 555 days.
Premature withdrawals refer to the extraction of funds from a term deposit account before it reaches its maturity. Most of the SBI Fixed Deposit schemes offer the facility of premature withdrawal. The SBI Tax Savings Scheme, 2006, however, does not permit the account holder to prematurely withdraw or close the account before the completion of the 5-year lock-in period. The other FD schemes have a penalty charge attached to any premature withdrawal. A penalty of 0.50% will be charged on the interest for an FD below Rs.5 lakh. Deposits above Rs.5 lakh and below Rs.1 crore will be charged with 1% on the interest. A deposit which is withdrawn before 7 days will not receive any interest payout.
SBI has dedicated exclusive term deposit schemes for Non-Resident Indians. The FD schemes include Non-Resident External (NRE) Account, Non-Resident Ordinary (NRO) Account and Foreign Currency Non-Resident (Bank) Deposit (FCNR B). These schemes offer repatriability to the principal amount as well as the interest income. An NRE account enables an NRI or Person of Indian Origin (POI) to invest their foreign earnings in Indian Rupees as an individual or as a joint account. The interest gained in exempt from any kind of taxation. A Rupee loan can be availed against an NRE account. An NRO account allows an NRI to park their earnings originating in India as a term deposit. The interest income will be subject to TDS at a rate of 30.90%. FCNR (B) account is a deposit that can be made in acceptable foreign currency. The interest and the principal amount can be operated in the desired foreign currency hence, making it resistant to market fluctuations. Loans can be availed against the deposit either in Indian Rupees or foreign currency. The interest income is exempt from any kind of taxation.
The interest rates for NRE and NRO FD accounts range between 6.70%-6.85% per annum. For FCNR (B) the USD rates range between 3.43%-3.44%, GBP rates lie between 1.43%-1.90%, EURO rates are between 0.01%-0.15%, CAD rates range between 2.27%-2.58%, AUD rates are 2.04%-2.54% and JPY rates lie between 0.02%-0.05%.
The following table illustrates a comparison of the main features of SBI term deposits for NRIs:
| Features | NRE | NRO | FCNR(B) |
|---|---|---|---|
| Tenor | 1 year-10 years | 7 days-10 years | 1 year-5 years |
| Principal Repatriability | Full repatriability | Conditional for income up to $1 million | Full repatriability |
| Interest Repatriability | Full repatriability | Repatriable but eligible for tax deductions | Full repatriability |
| Tax liabilities | Tax exemption on interest income | Subject to taxation under the IT Act, 1961 | Tax exemption on interest income |
| Operative currency | Rupees | Rupees | USD, GBP, CAD, JPY, EURO, AUD |
An SBI fixed deposit account can be closed online without any hassles in a matter of minutes. To close the account online, one must have an active internet banking ID and password.
State Bank of India is a government-owned corporation which was, until 1955, known as the Imperial Bank of India. The Government of India holds 58.6% shares in SBI and the remainder is divided amongst other shareholders. One among them is Life Insurance Corporation of India which is not a promoter for SBI but still holds 14.99% shares in the bank.
With over 14,000 branches spread across India, SBI has a massive domestic presence which keeps increasing as it acquires more state banks. State Bank of India also has more than 150 branches in over 30 countries and can be found in cities like Ramat Gan, Toronto, Moscow, Frankfurt, Colombo, Tehran, Hong Kong, London, Johannesburg, Los Angeles and even Sydney.
The bank started out with 8 subsidiary banks but now, after 3 were absorbed into SBI, it is left with only 5 which are State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore. Apart from its banking subsidiaries, SBI also has non-banking subsidiaries which are:
· SBI Capital Markets Ltd
· SBI Funds Management Pvt Ltd
· SBI Factors & Commercial Services Pvt Ltd
· SBI Cards & Payments Services Pvt. Ltd.
· SBI DFHI Ltd
· SBI Life Insurance Company Limited and
· SBI General Insurance
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Ever since September last year, the State Bank of India has been lowering its lending rates in accordance with the cut in the repo rates by the Reserve Bank of India. SBI has always been among the first few of the banks which pass on the benefits of reduced rates to their borrowers. Currently, the base rate of SBI stands at 9.7%, one of the least in the banking sector.
While some banks have reported that more cuts in their rates could be expected before the policy review this September, SBI has mentioned that all rates from January have been already transmitted and if the cost of deposits fall, the bank will reconsider its rates.
There has always been a lag for the rate cuts imposed by RBI to show up in the rates of banks. It stands to reason that banks also have to look at how beneficial their deposits actually are, in order to decide how smoothly the rate cuts can be passed on. Since only fresh deposits get the reduced rates, the existing deposits could take two quarters to actually benefit the bank.
With the borrowers shifting their funds increasingly from CASA to Fixed Deposits, SBI’s benefits have been thin from the deposit sectors.
6 August, 2015
In a bid to enhance its digital offerings, SBI now provides overdraft against fixed deposits to its online segment customers. The quantum of loan allowable will be up to 90% of the funds held in the customer’s FD account.
This facility is currently available to customers through SBI’s branches. However, customers can now access it instantly, online as well thereby eliminating the need to be present at a branch. This facility is available to customers via Internet Banking on SBI’s web portal.
SBI is soon to also launch this service on its mobile app State Bank Anywhere.
20 May 2015
