Some private sector banks (SBM, RBL, Bandhan, and IndusInd Bank) and small finance banks (such as AU Small Finance Bank, Jana Small Finance Bank, Suryoday Small Finance Bank, and Ujjivan Bank) provide senior citizens Fixed Deposit with an interest rate of 8.00% per annum or more. In such a case, if you are a senior citizen or want to take an FD for a senior citizen, then read this article.
Best FD plans for senior citizens in the year 2023
SBI Wecare FD Scheme
The State Bank of India (SBI) has launched a fixed deposit scheme for senior citizens named ‘SBI Wecare’. Under this scheme, an additional premium of 30 bps (in addition to the 50 bps extra interest given on regular FD rates) is given on FDs of 5 years and above.
HDFC Senior Citizen Care FD
HDFC Bank provides an additional premium of 25 bps (more than the existing premium of 50 bps) on deposits of less than 5 crores kept for a period of 5 years 1 day to 10 years for senior citizens.
ICICI Bank Golden Years
Under this FD scheme, an additional interest of 10 bps is given on FDs of senior citizens for a period of 5 years 1 day to 10 years, in addition to the existing premium of 50 bps.
Some important features of Senior Citizen FD are:
The minimum deposit amount is Rs. 100, which makes this feature accessible to senior citizens according to their time horizon and financial situation.
Options are provided for the tenure, which allows senior citizens to manage their savings according to their marital financial goals and available financial arrangements.
Senior citizens are provided with the option to choose different interest rates based on their preferences, including the option of cumulative interest.
Senior Citizen FD can be opened through internet banking or mobile application.
FD is covered by deposit insurance and credit guarantee corporation up to Rs. 5 lakh.
Features of Senior Citizen Fixed Deposit:
Deposit amount: Minimum amount: Rs. 100; Maximum: No limit
Tenure: From 7 days up to 10 years
Banks/NBFCs offer several options to senior citizens to earn interest on their fixed deposits, which they can choose based on their convenience. They can opt to receive interest monthly, quarterly (in three months), half-yearly (in six months), and annually. In addition to this, they can choose the option of cumulative FD to keep the interest until maturity. With cumulative interest, they can enjoy the benefit of compounding and earn higher returns. Thus, compared to non-cumulative FD, senior citizens can receive higher returns from cumulative FD.
Moreover, many banks/NBFCs allow senior citizens to break or withdraw partial amounts of their FD. However, most banks charge a penalty (which can be up to 2%) for this. Note that non-callable FDs cannot be broken.
Banks also provide the facility of automatic renewal of FDs. This means that the FD account will be renewed automatically on reaching the maturity date.
Deposit Insurance and Credit Guarantee Corporation (DICGC) covers FDs up to Rs. 5 lakhs.
Eligibility criteria for Senior Citizen Fixed Deposits: Residents who are 60 years or older can open an FD at prevailing senior citizen interest rates. Additionally, some banks/NBFCs offer extra interest rates to super senior citizens who are 80 years or older. For example, Indian Overseas Bank, Indian Bank, and RBL Bank offer senior citizens an additional interest rate of 0.75% on regular fixed deposits. PNB provides super senior citizens with an additional interest rate of 0.80%.
Documents required for Senior Citizen FD: If a senior citizen wants to open an FD in the same bank where they have a savings account, they can log in to net banking or mobile banking or visit the nearest branch with all the necessary documents to open an FD. However, if you are not a customer of the bank where you want to open an FD, you will have to visit the bank with the necessary documents as per the KYC guidelines given below.
Identification Proof: Senior Citizen ID card, Passport, PAN card, Voter ID card, Driving license, Photo ration card
Address proof: Passport, Telephone bill, Electricity bill Bank statement with cheque, ID card/certificate issued by post office
Related Questions (FAQs):
Question: Who can open a senior citizen fixed deposit account?
Answer: Senior citizens who are 60 years or older can apply for a senior citizen fixed deposit account. However, they will also have to provide age proof along with other necessary documents.
Question: Who is considered a senior citizen?
Answer: A person who is 60 years or older is legally considered a senior citizen.
Question: Which bank offers the highest FD interest rate to senior citizens?
Answer: Currently, Unity Small Finance Bank is providing senior citizens with the highest interest rate of 9.50%.
Question: Does the investment made in fixed deposits available for senior citizens come under the purview of investment tax?
Answer: Yes, if the interest earned is more than Rs. 50,000 in a financial year (from April 1 to March 31), then a 10% TDS (tax deducted at source) will be levied.
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