State Bank of India (SBI), India’s largest public sector bank offers a range of investment options under its Monthly Income Schemes (MIS). It is designed to provide a steady and reliable income stream for investors. These schemes are particularly appealing to retirees, senior citizens, and conservative investors seeking low-risk and predictable returns. This article provides a comprehensive overview of the SBI Monthly Income Scheme for 2025, focusing on the Annuity Deposit Scheme, it’s features, benefits, interest rates, and answers to frequently asked questions.
Overview of SBI Monthly Income Scheme
The SBI Monthly Income Scheme primarily refers to the SBI Annuity Deposit Scheme, a unique fixed deposit product that differs from traditional fixed deposits by offering monthly payouts that include both a portion of the principal and interest. This scheme is ideal for individuals who need regular income to cover expenses, such as retirees or those planning for financial stability without market-linked risks. Unlike mutual fund-based monthly income plans, the SBI Annuity Deposit Scheme is government-backed, ensuring capital safety and guaranteed returns.
Interest Rates for 2025
As of May 14, 2025, the interest rates for the SBI Annuity Deposit Scheme align with SBI’s domestic term deposit rates, effective from April 15, 2025. The rates vary by tenure and investor category:
|
Tenure |
General Public (% p.a.) |
Senior Citizens (% p.a.) |
|---|---|---|
|
3 years (36 months) |
6.75 | 7.25 |
|
5 years (60 months) |
7.00 | 7.50* |
|
7 years (84 months) |
6.75 | 7.25 |
|
10 years (120 months) |
6.75 | 7.25 |
Note: The 7.50% rate for senior citizens on 5-year deposits includes an additional 0.50% under the SBI WeCare scheme, which offers a premium for senior citizens on specific tenures.
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Compounding: Interest is compounded quarterly and discounted to calculate the monthly EMI, ensuring a steady payout.
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Staff and Pensioners: SBI staff and pensioners receive an additional 1% above the applicable rate (e.g., 8.50% for senior citizen staff on a 5-year deposit).
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Rate Stability: The interest rate at the time of deposit remains fixed for the entire tenure, unaffected by quarterly revisions.
How the SBI Annuity Deposit Scheme Works
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Lump Sum Deposit: Investors deposit a one-time lump sum, with a minimum of ₹25,000 (or enough to generate at least ₹1,000 monthly annuity). There is no upper limit on deposits.
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Monthly Payouts: The bank repays the deposit in fixed EMIs over the chosen tenure (3, 5, 7, or 10 years). Each EMI includes a portion of the principal and interest on the reducing principal, calculated using quarterly compounding.
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Example Calculation:
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Investment: ₹10,00,000 for 5 years at 7.00% p.a. (general public).
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Monthly EMI: Approximately ₹19,600 (includes principal repayment and interest).
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Breakdown (Month 1):
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Interest: (₹10,00,000 * 7.00% / 12) ≈ ₹5,833
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Principal Repayment: ₹19,600 – ₹5,833 ≈ ₹13,767
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Remaining Principal: ₹10,00,000 – ₹13,767 ≈ ₹9,86,233
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By the end of 5 years, the entire principal is repaid, and the investor receives a total of ₹11,76,000 (₹19,600 * 60 months), with ₹1,76,000 as interest.
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Use the SBI Annuity Deposit Scheme Calculator on SBI’s website or platforms like Groww or ClearTax for precise EMI calculations based on investment amount, tenure, and investor category.
Maturity Value
Unlike traditional fixed deposits, the SBI Annuity Deposit Scheme has a zero maturity value because the entire principal and interest are repaid through monthly EMIs over the tenure. For example:
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A ₹10,00,000 deposit over 5 years results in total payouts of ₹11,76,000, with no lump sum at maturity.
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Investors seeking a lump sum at maturity should consider SBI’s regular fixed deposits instead.
Key Features of the SBI Annuity Deposit Scheme
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Tenure Options: 3, 5, 7, or 10 years, allowing flexibility based on financial goals.
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Minimum and Maximum Deposit:
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Minimum: ₹25,000 or an amount ensuring at least ₹1,000 monthly annuity.
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Maximum: No upper limit, making it suitable for large investments.
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Eligibility:
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Resident individuals (single or joint accounts).
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Minors through a guardian.
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Non-Resident Indians (NRE/NRO accounts) are not eligible.
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Payout Mechanism: EMIs are credited to a linked SBI savings or current account on the anniversary date of the month following the deposit (e.g., if deposited on May 10, payments start June 10). If the date is non-existent (29th, 30th, 31st), payment occurs on the 1st of the next month.
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Loan Facility: Up to 75% of the remaining balance can be availed as an overdraft or loan, providing liquidity.
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Premature Withdrawal:
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Allowed for deposits up to ₹15,00,000 with a penalty (as per term deposit rules, typically 1% below the applicable rate).
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In case of the depositor’s death, premature withdrawal is allowed without limits or penalties.
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Nomination: Available for individuals, ensuring the nominee can claim the remaining balance or continue payments.
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Transferability: Accounts can be transferred between SBI branches across India at no cost.
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Taxation:
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Interest earned is taxable as per the investor’s income tax slab.
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No Tax Deducted at Source (TDS) if Form 15G (general public) or 15H (senior citizens) is submitted, subject to income tax rules.
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No Section 80C benefits, unlike the SBI Tax Savings Scheme.
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Benefits of the SBI Annuity Deposit Scheme
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Steady Income Stream: Fixed monthly EMIs provide financial stability for expenses, ideal for retirees or those needing passive income.
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Government-Backed Security: As an SBI product, it is fully guaranteed by the Government of India, ensuring zero risk to the principal.
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No Upper Deposit Limit: Investors can deposit large sums, making it suitable for high-net-worth individuals or those with significant savings.
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Higher Rates for Senior Citizens: The additional 0.50% (or 1.10% for super senior citizens under SBI Patrons) enhances returns for older investors.
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Loan and Withdrawal Flexibility: Access to loans and premature withdrawal options provide liquidity in emergencies.
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Hassle-Free Process: Accounts can be opened online via SBI NetBanking/YONO app or offline at any SBI branch, with minimal documentation.
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Retirement-Friendly: The scheme’s structure supports financial independence, reducing reliance on family or other income sources.
How to Open an SBI Annuity Deposit Scheme Account
Online (SBI NetBanking or YONO App):
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Log in to SBI NetBanking or the YONO app.
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Navigate to Deposit Scheme > Term Deposits > Annuity Deposit Scheme.
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Select tenure, deposit amount, and nominee details.
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Link a savings/current account for EMI credits.
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Accept the terms and conditions and submit.
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Transfer the lump sum from your linked account.
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Receive confirmation and a digital receipt.
Offline (SBI Branch):
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Visit the nearest SBI branch.
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Fill out the Annuity Deposit Scheme application form.
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Submit KYC documents:
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Identity proof (Aadhaar, PAN, voter ID, passport).
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Address proof (utility bill, Aadhaar).
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Age proof (birth certificate, school certificate for minors).
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Four passport-size photographs.
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Deposit the lump sum via cash, cheque, or account transfer.
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Provide nominee details and receive a passbook or receipt.
Prerequisite: An active SBI savings or current account is mandatory. The account’s operational instructions (single/joint) must match the funding account.
Comparison with Other Monthly Income Options
|
Feature |
SBI Annuity Deposit Scheme |
Post Office RD (₹1000/month) |
SBI Regular FD (Monthly Interest) |
|---|---|---|---|
|
Interest Rate |
6.75–7.50% p.a. (2025) |
6.7% p.a. (2025 Q1) |
6.50–7.50% p.a. |
|
Tenure |
3, 5, 7, 10 years |
5 years (extendable) |
7 days to 10 years |
|
Minimum Deposit |
₹25,000 |
₹100/month |
₹1,000 |
|
Payout |
EMI (principal + interest) |
Lump sum at maturity |
Interest only (monthly) |
|
Risk |
Risk-free |
Risk-free |
Risk-free Hiện |
|
Tax Benefit |
None (taxable interest) |
Section 80C (deposits) |
None (taxable interest) |
|
Liquidity |
Loan, premature withdrawal |
Loan, withdrawal after 3 yrs |
Loan, premature withdrawal |
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SBI Annuity vs. Post Office RD: The Annuity Scheme offers immediate monthly payouts, while Post Office RD provides a lump sum at maturity, suitable for long-term savings.
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SBI Annuity vs. Regular FD: Regular FDs with monthly interest payouts preserve the principal until maturity, while the Annuity Scheme repays the principal gradually.
Frequently Asked Questions (FAQ)
Q1: What is the SBI Monthly Income Scheme?
A: The SBI Monthly Income Scheme primarily refers to the SBI Annuity Deposit Scheme, where a lump sum deposit is repaid in fixed monthly EMIs (principal + interest) over 3, 5, 7, or 10 years. It ensures steady income with government-backed security.
Q2: What are the interest rates for the SBI Annuity Deposit Scheme in 2025?
A: As of April 15, 2025, rates range from 6.75% to 7.00% p.a. for the general public and 7.25% to 7.50% p.a. for senior citizens, depending on the tenure. Senior citizens get an additional 0.50% under SBI WeCare for 5-year deposits.
Q3: Is the interest earned tax-free?
A: No, interest is taxable as per your income tax slab. Submit Form 15G (general public) or 15H (senior citizens) to avoid TDS if eligible. The scheme does not offer Section 80C benefits.
Q4: What is the minimum and maximum deposit amount?
A: The minimum deposit is ₹25,000 or enough to generate a ₹1,000 monthly annuity. There is no upper limit, allowing flexibility for large investments.
Q5: Can I open the SBI Annuity Deposit Scheme online?
A: Yes, existing SBI customers can open it via SBI NetBanking or the YONO app. Alternatively, visit an SBI branch for offline account opening.
Q6: Can I withdraw funds before maturity?
A: Premature withdrawal is allowed for deposits up to ₹15,00,000 with a penalty (typically 1% below the applicable rate). In case of the depositor’s death, withdrawal is permitted without limits or penalties.
Q7: Is a loan available against the Annuity Deposit Scheme?
A: Yes, you can avail a loan or overdraft up to 75% of the remaining balance, providing liquidity during the tenure.
Q8: Who is eligible to invest in the SBI Annuity Deposit Scheme?
A: Resident individuals (single or joint), including minors through a guardian, are eligible. Non-Resident Indians (NRE/NRO accounts) cannot invest.
Q9: What happens to the account if the depositor passes away?
A: The nominee can claim the remaining balance or continue receiving EMIs. Premature withdrawal is allowed without penalties in case of death.
Q10: How does the SBI Annuity Deposit Scheme differ from a regular fixed deposit?
A: Unlike a regular FD, which pays interest monthly/quarterly and returns the principal at maturity, the Annuity Scheme repays both principal and interest through monthly EMIs, resulting in zero maturity value.
For more information visit : https://sbi.co.in/web/personal-banking/investments-deposits/deposits/annuity-deposit-scheme
Also visit : https://postofficefd.com/ppf-interest-rate-2025/