The present uncertain situation has left many people to take up the idea of saving seriously. Though the market currently has an array of investment options which is suitable for all kinds of investors - risk-averse, risk-takers and so on a corporate firm like Bajaj Finance has come up with a new investment scheme known as Systematic Deposit Plan.
What is Systematic Deposit Plan?
The Systematic Deposit plan is a kind of fixed deposit which acts as a quick saving tool rolled out by Bajaj Finance which allows the investors to park their small-sized monthly deposit as low as Rs 5,000. So, every deposit which an investor makes will be counted as a new Bajaj Finance Fixed Deposit and the same will mature based on the pre-determined tenure opted by the investor.
Each of these new deposits will be booked at an interest rate which is applicable on the date of the deposit.
How Does the Systematic Deposit Plan Work?
The Systematic Deposit Plan is a scheme which comes in for a period between 12 months to 60 months. The depositor can invest the scheme by investing a minimum deposit of Rs 5,000 monthly, at the prevailing interest rates.
Each of these investments which will be made monthly will be treated as a new investment. The first payment has to be made through cheque and thereafter monthly deposits can be automated through NACH mandate which will directly debit the deposit plan from your bank account.
Further deposits in this plan can be done on a fixed date which is either on 3rd or 7th or 12th of every month and this will provide some kind of convenience for the depositors.
The investor can choose the tenure of the deposits based on their financial goals out of the 12 - 60 months period. But the period once set will remain the same for all the future deposits.
For Example: If Mr A has decided to make a monthly deposit of Rs 6,000 for 10 months, then at the end of the tenure, he would have saved Rs 60,000 after 10 months after making the final monthly deposit of Rs 6,000.
The earnings from each of these deposits will be available on maturity only. Each of the deposit you make will carry the same tenure.
How Does the Systematic Deposit Plan Work?
The Systematic Deposit Plan offers an interest rate in the range of 7 - 7.2 per cent and senior citizens will earn extra 15 basis points (bps) and this will be based on the period of investment. An investor can even choose the interest payout option at the time of investment which is monthly or quarterly or half-yearly or yearly or on cumulative options as per their requirement.
Each of the new monthly deposit will be considered as a new fixed deposit and hence the maturity proceeds will be received at the frequent intervals. Once the deposit completes 3 months from the date of issue, the investor will be eligible for premature withdrawal, but it comes with a penalty. They can even take a loan against these deposits to meet any emergency.
Documents Required for Bajaj Finance’s Systematic Deposit Plan
The investor should submit the following list of documents at the time of applying and they are:
• Aadhaar Card
• PAN Card
• Recent Passport Sized Photographs
• NACH Mandate
• Passport or Election Voters ID Card or Driving Licence or NREGA job Card
• Account Payee Cheque
Advantages of Investing in Systematic Deposit Plan
• This investment plan offers an attractive interest rate which is far higher than the ones offered by the banks in the prevailing situation.
• The returns from the plan will be higher compared to the fixed deposits offered by banks.
• Bajaj Finance is rated ‘FAAA' by both CRISIL and ICRA. This rating indicates the highest degree of safety regarding timely payment of principal and interest is very strong.
• Having a new fixed deposit monthly as against the regular recurring deposit allows the investor for premature withdrawal in parts.
Disadvantages of Investing in Systematic Deposit Plan
• The interest rates on this plan are subject to change and hence the deposits will earn the then-prevailing interest rates as against the recurring deposits wherein the interest rate will be constant throughout the tenure. If the interest rates dip in the future, the new instalments will earn lower interest rates.
• Premature withdrawal facility which is available in this plan after completion of three months comes with penalty charges.
• Every month a new fixed deposit will be issued as per the scheme and hence it becomes difficult to physically manage these receipts until the maturity date.
• The Systematic Deposit Plan is a corporate deposit and the same is not guaranteed by the Deposit Insurance and Credit Guarantee Corporation (DICGC), whereas the fixed deposits issued by banks come up with insurance coverage of up to Rs 5,00,000.
• Stopping the deposit by cancelling the NACH mandate which is an electronic transfer of money from the bank account of the deposits takes its own time and is not investor-friendly.