Senior citizens get high interest rates on these special deposit plans

Which are the special Deposit plans offered by various banks to senior citizens

- R Satyanarayana Murthy, Bengaluru

State Bank of India launched the 'WeCare' scheme in May 2020. The 'WeCare' scheme is aimed to help senior citizens by providing them with higher interest rates on their fixed deposits. In simple words, 'WeCare' offers additional interest on term deposits. State Bank of India provides additional interest on its WeCare term deposits to senior citizens.

Suppose a non-senior citizen customer gets 5.50 percent interest on regular term deposits. In that case, senior citizens will get 6.30 percent interest on their term deposits. This means senior citizens will earn an additional premium of 30 bps over and above the existing 50 bps given to them.

However, these interest rates are applicable on retail term deposits less than Rs two crore. Those who can afford long-term savings or wait for a minimum of five years can utilise this scheme, as the period of deposit is a minimum of five years and a maximum of ten years. Those who withdrew the WeCare deposit before maturity or break the fixed deposit before completion of its tenure will not be entitled to the additional interest under the scheme.

Once the senior citizens create a deposit under the WeCare scheme, they can renew, provided SBI does not withdraw the scheme. Senior citizens either open a fresh deposit under the WeCare scheme or convert their maturing deposits upon renewal. They can create the 'WeCare' term deposits by visiting the nearest SBI branch or theough YONO App or Internet Banking. Since the launch of the 'WeCare' scheme, SBI has extended the deadline multiple times.

Initially, the 'WeCare' deposit scheme's deadline for senior citizens was 31 December 2020. Later it was extended to 30 June 2021 and 30 September 2021. The scheme was extended further to 30 September 2022. Finally, SBI extended the deadline of the WeCare FD scheme for senior citizens till 31 March 2023.

In May 2020, ICICI Bank launched a new scheme, "ICICI Bank Golden Years FD". Under this scheme, ICICI Bank offers a special term deposit scheme for senior citizens.

The bank gives an additional interest rate of 0.25 percent and the current standard benefit of 0.50 percent. ICICI Bank Golden Years FD's tenure is five years to ten years. However, the ICICI Bank Golden Years FD scheme is getting closed on 7 October, which was extended from April 2022. ICICI Bank levy 1.25 percent as a penalty, if a term deposit under this scheme is withdrawn or closed before the tenure

Like all other banks, in May 2020, HDFC Bank introduced the "Senior Citizen Care FD" during Covid-19. Under this scheme, HDFC Bank offers senior citizens 0.75 percent additional interest over and above the standard rate. Term deposits of less than five crores for a tenure of five years, one day to ten years, are being accepted.

The offer applies to senior citizens who are resident Indians. The scheme was extended further to 31 March 2022 by HDFC Bank. The scheme is finally getting closed with effect from 30 September 2022. In case of premature closure, including sweep-in or partial closure of fixed deposit booked under "Senior Citizen Care FD" before five-year tenure.

HDFC Bank will levy a 1.00 percent penalty below the contracted rate or the base rate applicable for the period the deposit has remained with HDFC bank, whichever is lower. The penalty will be 1.25 percent in case of premature closure, including sweep-in or partial closure of fixed deposit booked under "Senior Citizen Care FD" before ten-year tenure. 1.25 percent penalty below the contracted rate or the base rate applicable for the period the deposit has remained with HDFC bank, whichever is lower.

IDBI Bank launched "Naman Senior Citizen Fixed Deposits," a special deposit scheme for senior citizens. Naman Senior Citizen Fixed Deposits scheme came into effect on 20 April 2022 and is valid till 30 September 2022. The special fixed deposit scheme has a maturity duration ranging from more than one year to ten years. Under this scheme, IDBI Bank offers an additional interest rate of 0.25 per cent over and above the existing additional rate of 0.50 per cent a year to senior citizens.

Moreover, the additional rate benefit will be offered on both initial and renewing deposits. Premature withdrawals are permitted in Naman Senior Citizen Fixed Deposits. Interest payable on prematurely withdrawn deposits will be the rate applicable for the amount and the period for which the deposit remained with the Bank. IDBI Bank will levy a penalty of 1.00 percent on the applicable rate for such premature withdrawals, including sweep-ins and partial withdrawals.

(The author is a SEBI licensed Research Analyst. The alumnus of the Indian Institute of Foreign Trade (IIFT), he had held leadership roles at National Geographic, Reliance Radio Television Luxembourg, STAR TV, etc)