New Delhi: State Bank of India (SBI) offers a variety of products ranging from savings to fixed deposit accounts. One of these products offered by SBI is the Reinvestment FD Plan, which works like a fixed deposit. In an SBI Reinvestment Plan, the interest is paid out only at the time of maturity. Regular interest is added to the principal and compound interest is calculated and paid thereon. The minimum instalment that one is required to deposit in an SBI Reinvestment FD Plan is 1,000. However, there is no maximum limit for deposits.

Five things to know about an SBI Reinvestment FD Plan

1. Interest rates on an SBI Reinvestment Plan are the same as on fixed deposits, with quarterly compounding. Interest is paid out on maturity.

2. The minimum tenure for an SBI Reinvestment FD Plan is 6 months and the maximum is 10 years. SBI exercises an auto renewal on its Reinvestment FD Plan if maturity instructions are not given.

3. An SBI Reinvestment FD Plan offers a premature withdrawal facility.

-For retail term deposit up to 5 lakh, the penalty for premature withdrawal will be 0.50% (all tenors).

-For retail term deposits above 5 lakh but below 1 crore, applicable penalty will be 1% (all tenors).

The interest shall be 0.50% or 1% below the rate applicable at the time of deposit for the period deposit remaining with the bank or 0.50% or 1% below the contracted rate, whichever is lower. However, no interest will be paid on deposits which remain for a period of less than 7 days.

Also Read: SBI zero balance savings account for children: 10 things to know

4. Tax deducted at source is applicable for an SBI Reinvestment FD Plan. TDS is deducted at prevalent the income tax rate if Form 15G/15H is not submitted.

5. An SBI Reinvestment FD Plan offers loan or overdraft facility up to 90% of the deposit amount plus accrued interest, at 1.00% above the STDR (special term deposit rate).

An SBI Reinvestment FD Plan offers nomination facility also.

Also Read: Explained: How to open SBI zero balance savings account

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