Four major banks of the country – two public sector and two private sector – have come up with a scheme for the common people which has the combined features of both recurring deposit and fixed deposit. This is called Flexi Deposit Scheme. It is a type of recurring deposit (RD) facility, which has almost all the same facilities as a fixed deposit (FD). Apart from SBI and Bank of India, ICICI and Axis Bank offer this type of flexi deposit account.
But unlike an RD account, where you have to deposit a fixed installment every month, these flexi deposit schemes have varying installment rates, on the other hand, interest rates and loan facilities are available like FDs.
9 special features of this attractive flexi deposit scheme.
1. This scheme can be started with only Rs.500 per month, the maximum limit for a financial year is limited to Rs.50,000.
2. In a financial year, the minimum deposit amount in this flexi deposit scheme is Rs.5,000.
3. Unlike RD, in this flexi deposit scheme one can deposit money anytime and any number of times in a month. The amount is also not fixed every time.
4. The minimum tenure of this scheme is five years and the maximum is seven years.
5. SBI Flexi Deposit has an interest rate of 5.4%, which is equivalent to the rate of 5 years to 10 years term deposits. Like FDs, senior citizens are entitled to get 0.5% higher interest rate on this flexi deposit scheme.
6. The interest rate varies from bank to bank. Generally, in a flexi deposit account, banks offer a rate equal to the rate offered in a fixed deposit between five and 10 years.
7. For deposits up to Rs.5 lakh, the penalty for premature withdrawal will be 0.50% for all tenors. For deposits above Rs 5 lakh, the applicable penalty for all tenors will be 1%.
8. Tax Deduction at Source is applicable as per Income Tax Act 1961. The depositor can submit Form 15G/15H to get exemption from tax deduction as per the Income Tax Act.
9. Loan or overdraft facility up to 90% of the total invested amount can be availed at any point of time during the tenure. The depositor can get Universal Pass Book from the bank with the facility of transfer of his account anywhere. Nomination facility is also available in Flexi Deposit Scheme.