SBI Wecare Deposit scheme offers 0.8% Senior Citizen benefit on TD
SBI Wecare Deposit is a new term deposit scheme announced by the largest commercial bank in India for Senior Citizens. The SBI Wecare scheme is announced to protect the interest income earned by senior citizens on their term deposits, in the currently falling interest rate regime.
What prompted SBI to announce SBI Wecare Deposit scheme?
On 7th May, 2020 SBI announced a cut of 15 bps in its Marginal Cost of Funds Based Lending Rate (MCLR). Similarly, it also reduced interest rate on retail term deposits (below Rs 2 crores) by 20 bps for tenures up to three years. The reduction in interest rate on deposits is announced considering the overall liquidity available in the market and deposit position of the bank.
Majority of banks in India have been offering additional 50 bps interest to senior citizens over the deposit interest rate applicable for same tenure for public. SBI has been offering 50 bps interests as senior citizen benefits.
Though senior citizens have been receiving 50 bps (0.50%) interest more on their fixed deposits than that applicable to general public, the actual interest rate has eroded substantially over the last few months due to consistent cuts in Repo rates by RBI and consequent cut in lending and deposit interest rates by banks. SBI through the new scheme offers some relief to senior citizens who are ready to lock in deposits for longer period. SBI safeguards the interest of senior citizens to some extent in the falling interest rate regime by offering additional 30 bps (0.30%) interest rate to senior citizens for deposits of 5 years and above. Total senior citizen benefit in interest rate offered for such deposits is 80 bps (0.80%).
How much is the additional interest rate offered for deposits under SBI Wecare Deposit scheme?
So far, SBI has been offering additional 50 bps (0.50%) interest as senior citizen benefit on term deposits of all tenures. The same benefit of 50 bps will continue for term deposits below 5 years. The senior citizen benefit will be 80 bps (0.80%) for term deposits of 5 years and above under SBI Wecare Scheme. This 0.8% is inclusive of the now announced additional interest of 0.3%.
SBI Wecare Deposit scheme will be in existence till September 30,2020 for opening deposits and the deposits with the benefits can be opened from 12th May 2015.
The fixed deposit interest rate applicable on fixed deposits for public and senior citizens effective from 12th May 2020 will be as shown below:
| Period | Existing rate for public wef 28/3/20 | Revised rate for public wef 12/05/20 | Existing rate for Senior citizen wef 28/3/20 | Revised rate for senior citizen wef 12/05/20 |
| 7 days to 45 days | 3.50 | 3.30 | 4.00 | 3.80 |
| 46 days to 179 days | 4.50 | 4.30 | 5.00 | 4.80 |
| 180 days to 210 days | 5.00 | 4.80 | 5.50 | 5.30 |
| 211 days to less than 1 year | 5.00 | 4.80 | 5.50 | 5.30 |
| 1 year to less than 2 years | 5.70 | 5.50 | 6.20 | 6.00 |
| 2 yeras to less than 3 years | 5.70 | 5.50 | 6.20 | 6.00 |
| 3 years to less than 5 years | 5.70 | 5.70 | 6.20 | 6.20 |
| 5 years and upto 10 years | 5.70 | 5.70 | 6.20 | 6.50 |
Is the interest rate for senior citizens on SBI Wecare Deposit scheme is the best in the market?
The best interest rates offered by some of the other leading banks in India for public and senior citizens are provided below, for comparison.
| Bank | Period | Best interest rate offered for public – % | Best interest rate offered for senior citizens -% | Senior citizen benefit -% |
| HDFC Bank | 2 years 1 day to 10 years | 6.00 | 6.50 | 0.50 |
| Indus Ind Bank | 1 years to 1 year 2 days | 7.00 | 7.50 | 0.50 |
| Bank of Baroda | 1 year to 10 years | 5.70 | 6.20 | 0.50 |
| Federal bank | Above 1 year to 10 years | 6.25 | 6.75 | 0.50 |
| Punjab National Bank | 1 year to 10 years | 5.75 | 6.25 | 0.50 |
The table indicates that three banks HDFC Bank (6.50%), IndusInd Bank (7.50%) and Federal Bank( 6.75%) offer same/ better interest rates to senior citizens. However, the senior citizen benefit offered by them continue to be 0.5% compared to 0.80% announced by SBI.
