State Bank of India (SBI), the country’s largest lender, offers various schemes under its personal banking portfolio. SBI’s Flexi Deposit scheme is similar to a recurring deposit (RD) however it enables the account holder to contribute a variable amount to the corpus, instead of a fixed instalment (as in the case of recurring deposit). All resident individual customers including minors are eligible for the bank’s Flexi Deposit scheme, according to SBI’s corporate website – sbi.co.in. The scheme is available at all branches (except specialized credit intensive branches) across the country.
Here are some important features to know about SBI’s Flexi Deposit scheme:
A Flexi Deposit account can be set up at a minimum instalment of Rs. 500, and requires a minimum investment of Rs. 5,000 in a financial year, according to the SBI website. Deposits can be made anytime during a month and any number of times. The maximum amount that one can deposit in the Flexi Deposit scheme is Rs. 50,000.
SBI allows a minimum term of five years and a maximum of seven years for the Flexi Deposit scheme.
The interest rate is the same as applicable to the bank’s fixed deposits. SBI currently offers an interest rate of 6.25 per cent to the general public on retail term deposits. The interest rate payable to SBI staff and pensioners is however kept 1 percentage point above the applicable rate. The rate applicable to senior citizens is 0.50 per cent above the applicable rate, according to the SBI website.
SBI allows a premature withdrawal facility with its Flexi Deposit scheme. For deposits up to Rs. 5 lakh, a penalty of 0.50 per cent (all tenors) is applicable on premature withdrawals. For those above Rs. 5 lakh, the applicable penalty is 1 per cent (all tenors), according to SBI.
The interest is 0.50 per cent or 1 per cent below the rate applicable at the time of deposit, whichever is lower. However, no interest is paid on deposits kept with the bank for a period less than seven days.
Income Tax Rules
TDS or tax deduction at source is applicable as per income tax rules. However, Form 15G/H can be submitted by the depositor to get exemption from tax deduction, according to the SBI website.