Managing savings becomes easier when you have a clear plan for using your money. Some people prefer keeping their savings in a fixed deposit, while others want to receive a certain amount every month. The SBI Annuity Deposit Scheme is designed for people who want regular monthly payments from a one-time investment.
Under this scheme, customers deposit a lump sum amount with the State Bank of India (SBI). The bank then pays them monthly instalments for a selected period. Each payment includes a portion of the deposited money along with interest.
In this article, we will explain the SBI Annuity Deposit Scheme, including its interest rates, eligibility, benefits, deposit amount, application process and important rules.
Table of Contents
What Is the SBI Annuity Deposit Scheme?
The SBI Annuity Deposit Scheme is a special deposit facility offered by the State Bank of India. It allows customers to invest a large amount once and receive monthly payments over a fixed period.
The monthly payment is not entirely interest income. It includes both interest and a part of the original investment.
For example, a person who receives retirement benefits may want to use those savings for regular household expenses. Instead of withdrawing money from the bank every month, they can invest an amount in the annuity deposit scheme.
SBI calculates the monthly instalment according to the investment amount, interest rate and deposit period. Once the selected period ends, the monthly payments stop because the deposit has been repaid.
How Does the SBI Annuity Deposit Scheme Work?
The working process of this scheme is simple.
A customer deposits a lump sum amount into an SBI annuity account. The bank calculates the monthly instalment based on the selected tenure and applicable interest rate.
Each monthly payment includes:
- A portion of the original investment.
- Interest earned on the outstanding deposit amount.
Suppose someone invests ₹5 lakh for five years. SBI calculates a monthly instalment that will be paid for 60 months.
As payments continue, the remaining principal gradually decreases. By the end of the tenure, the invested money and applicable interest have been paid through monthly instalments.
Unlike a traditional fixed deposit, the principal does not remain untouched until maturity.
What Are the Main Features of the SBI Annuity Deposit Scheme?
The scheme offers several features that make it useful for planned monthly payments.
| Features | Details |
|---|---|
| Scheme name | SBI Annuity Deposit Scheme |
| Bank | State Bank of India |
| Investment type | One-time lump sum deposit |
| Monthly payment | Principal plus interest |
| Deposit tenure | 3, 5, 7 or 10 years |
| Minimum monthly annuity | ₹1,000 |
| Interest rate | Based on applicable SBI term deposit rates |
| Senior citizen benefit | Additional interest where applicable |
| Payment frequency | Monthly |
| Premature withdrawal | Subject to SBI rules |
What Is the SBI Annuity Deposit Scheme Interest Rate in 2026?
The interest rate determines how much money customers receive through monthly instalments. SBI generally applies the relevant term deposit interest rate according to the selected deposit period and customer category.
Senior citizens may receive higher interest rates than regular customers. The following table shows historical reference rates from SBI’s July 2025 retail term deposit schedule.
| Deposit tenure | General customers | Senior citizens |
|---|---|---|
| 3 years to less than 5 years | 6.30% | 6.80% |
| 5 years to 10 years | 6.05% | 7.05% |
These are historical reference rates, not confirmed October 2026 rates. The senior citizen rate for the longer tenure included a special premium, subject to eligibility.
Interest rates can change according to SBI’s deposit policies. Customers should confirm the latest applicable rates before opening an account.
What Is the Minimum Deposit Amount?
The SBI Annuity Deposit Scheme does not have a single fixed minimum lump sum amount for every tenure. Instead, the minimum investment is calculated so that the customer receives at least ₹1,000 per month.
The required deposit depends on the interest rate and selected period. For example, the minimum investment needed for a three-year deposit will differ from the amount required for a ten-year deposit.
Customers planning to invest should request an exact monthly payment calculation from SBI.
Who Is Eligible for the SBI Annuity Deposit Scheme?
The scheme is available to eligible customers who want monthly payments from their savings. Resident individuals may apply according to the bank’s account-opening rules.
Customers can enquire about individual and joint accounts. Eligibility for minors and other customer categories should be confirmed with SBI.
Applicants must complete the required banking and identity verification procedures. The scheme is not restricted to retired employees. Eligible working professionals and other individuals can also consider it for financial planning.
What Documents Are Required for the SBI Annuity Deposit Scheme?
Customers may need to provide the following documents:
- Aadhaar card or another accepted identity proof.
- PAN card or applicable tax declaration.
- Address proof, if required.
- Passport-size photographs, where requested.
- Existing SBI account details.
- Completed application form.
How to Open an SBI Annuity Deposit Scheme Account?
Customers interested in opening an SBI annuity deposit account can follow these steps.
Step 1: Visit an SBI Branch
Visit your nearest SBI branch and ask the bank representative about the annuity deposit facility.
Step 2: Select the Deposit Tenure
Choose a deposit period of 3, 5, 7 or 10 years based on your monthly income requirements.
Step 3: Decide the Investment Amount
Select the amount you want to deposit. Ask the bank to calculate the monthly instalment before proceeding.
Step 4: Submit the Application
Complete the application form and provide the necessary documents.
Step 5: Make the Deposit
Transfer the investment amount using an accepted banking method.
Step 6: Receive Monthly Payments
After the account is opened, monthly instalments will be credited according to the agreed payment schedule.
What Are the Benefits of the SBI Annuity Deposit Scheme?
Regular Monthly Income
Customers receive monthly payments without needing to withdraw money manually. This makes it easier to plan regular household expenses.
Flexible Deposit Periods
The scheme offers four tenure options. Customers can select a period based on how long they need monthly payments.
Suitable for Retirement Planning
Retired employees can use a portion of their retirement savings to arrange regular monthly cash flow.
No Monthly Contributions
Customers invest money once. They do not need to make additional deposits every month.
Predictable Payments
The instalment amount is calculated when the deposit is opened, helping customers plan their expenses.
What Are the Disadvantages of the SBI Annuity Deposit Scheme?
The scheme also has some limitations.
The monthly payment includes the customer’s own money, so it should not be treated entirely as investment profit.
Another limitation is that payments stop after the deposit period ends. Inflation can also reduce the purchasing power of monthly instalments over time.
Additionally, premature withdrawal may involve restrictions or penalties. Customers should consider these factors before investing their savings.
What Is the Difference Between SBI Annuity Deposit Scheme and Fixed Deposit?
| SBI Annuity Deposit Scheme | SBI Fixed Deposit |
|---|---|
| Provides monthly payments | Offers different interest payment options |
| Principal is returned gradually | Principal is generally returned at maturity |
| Suitable for regular cash flow | Suitable for saving money |
| Tenure of 3, 5, 7 or 10 years | Wider range of deposit periods |
| Monthly payment includes principal and interest | Interest and principal payments depend on FD type |
Is the SBI Annuity Deposit Scheme Taxable?
Interest earned under the SBI Annuity Deposit Scheme is generally taxable according to applicable income tax rules.
However, the principal portion of monthly instalments is not treated as interest income. Tax deducted at source may apply when the relevant conditions are met.
Customers should check the latest tax rules or consult a qualified tax professional to understand their individual tax obligations.
Can You Withdraw Money Before Maturity?
Premature closure may be permitted under SBI’s applicable conditions. The bank may apply interest adjustments or penalties depending on the deposit and circumstances.
Customers should remember that part of their original investment has already been returned through monthly payments.
Conclusion
The SBI Annuity Deposit Scheme can be a useful option for people who want regular monthly payments from their savings. Customers can choose a deposit period based on their financial needs and receive scheduled instalments containing principal and interest.
However, it is important to remember that the scheme does not provide lifelong income. Payments stop when the selected tenure ends.
Before investing, customers should compare the latest interest rates, understand the withdrawal conditions and calculate their expected monthly payments. This will help them decide whether the SBI Annuity Deposit Scheme is suitable for their financial plans.
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