If you are a safe investor and cannot afford capital erosion by any chance, traditional fixed-income instruments work best for you. Aand while deposits of comparatively longer tenure fetch higher return, here's a good piece of news for those considering opening RD account with the State Bank of India.
The public run-lender with effect from November 28, 2018 is offering interest rates of RDs at par with deposits of similar tenure. The investment in an RD involves deployment of a fixed sum on a month on month basis for some pre-decided term.
Some of the features of SBI's RD scheme
An individual can deposit a minimum of Rs. 100 towards the SBI RD account and in multiples of Rs. thereof, with no maximum limit.
The account needs to be maintained for a minimum of 1 year and maximum 120 months or 10 years.
As per the bank's notification on its site, the RD scheme will offer interest rate or return at par with interest on TDR or STDR of similar tenure. So, the RD scheme can fetch an interest as high as 6.85% for RD scheme extended for a tenure between 5 and 10 years.
Also, there is a loan or overdraft facility for up to 90% of the RD balance amount.
Nomination facility needs to be availed against the account
Premature rules are same as applicable in case of STDR or TDR
In case the depositor misses to deposit any of the monthly deposit there will be a penalty amount levied depending on the tenure of the deposit scheme. For RD accounts with tenure spanning 5 years and less there will be penalty charged of Rs. 1.5 per Rs. 100 per month while in the other case where the account tenure is over 5 years, penalty implication will be Rs. 2 per Rs. 100 per month.
In case the payment of deposit towards the RD account remains outstanding for 3 consecutive months then there is a service charge that will be charged on RD accounts paid on or after maturity date, A service charge @ Rs. 10 will be charged at the time of making such a deposit or on maturity.
And in a case when the account is not regularized for six continuous months then the account is closed prematurely and balance is paid to the account holder.