Annuity Deposit Scheme is a savings scheme that allows depositors to make a one-time lump sum payment and receive it back in monthly installments. The installments are calculated as a part of the principal amount plus the interest earned, compounded at quarterly rests, and discounted to the monthly value.
Eligibility Criteria:
To avail of this scheme, one needs to be an Indian citizen. Non-resident ordinary and non-resident external savings account holders are not eligible.
Benefits:
One of the significant benefits of the annuity deposit scheme is that it allows for premature payment in the event of the death of the depositor of the scheme. The interest earned on annuity deposits is subject to TDS. There are also situations where the scheme allows an overdraft or loan up to 75% of the annuity balance.
Features:
The annuity deposit scheme can be opened as a term deposit account (single) or special term deposit account (joint). The deposit amount varies depending on the bank. For example, SBI's annuity deposit account requires a minimum annuity of Rs 1,000/- and a minimum deposit of Rs 25,000/-. However, there is no limit set for the maximum deposit.
The rate of interest on the annuity deposit scheme is based on the tenure chosen by the depositor.
SBI provides the highest returns of 7.5% and the lowest returns of 5.25%. Senior citizens can avail an additional 0.5% on their deposits. The period of deposit varies depending on the bank and is typically between 1 to 10 years. For example, SBI offers tenures of 36/60/84 or 120 months.
Required Documents:
The depositor must visit the bank office to discuss the required documents. However, every bank typically requires a PAN card, Aadhaar card, and a bank account in the same bank.
The annuity deposit scheme is an excellent investment option for individuals looking for a regular source of income.