The Union Bank of India is one of the largest public sector banks in the country and was incorporated as a limited company in 1919. It is headquartered in Mumbai. After merging Corporation Bank and Andhra Banks with itself, Union Bank attained the 4th position in being the largest bank in terms of its spread of network branches. The Bank also has overseas presence in Dubai, Hong Kong, Sydney etc.
Among its host of financial products, the Senior Citizen Savings Scheme (SCSS) is one of the most popular offerings. This government-sponsored scheme was brought forth in 2004 as an investment instrument to specifically meet the need or requirements of senior citizens, aged 60 years or more.
Mentioned below are few of the major features of the UBI Senior Citizen Scheme which should be taken into consideration before investing under this scheme.
Among other savings options offered by various financial institutions, this scheme is one that is wrought with benefits and attractive features. These include –
Eligible customers with the bank can open an account under this scheme and avail the attractive Union Bank of India SCSS interest rate.
The interest rate of the Senior Citizen Savings Scheme is declared by the Ministry of Finance prior to every quarter. The rate of interest as on September 15th, 2020, is 7.4%. This rate was announced on July 1st, 2020.
The following table gives the interest rate which was applicable in the previous few quarters –
|Quarters||Rate of Interest|
|(FY 2020-21 Q2) July to September||7.4%|
|(FY 2020-21 Q1) April to June||7.4%|
|(FY 2019-20 Q4) January to March||8.6%|
|(FY 2019-20 Q3) October to December||8.6%|
|(FY 2019-20 Q2) July to September||8.6%|
|(FY 2019-20 Q1) April to June||8.7%|
|(FY 2018-19 Q4) January to March||8.7%|
|(FY 2018-19 Q3) October to December||8.7%|
|(FY 2018-19 Q2) July to September||8.3%|
|(FY 2018-19 Q1) April to June||8.3%|
It is to be noted here that for the tenure of 5 years, the applicable rate of interest will be the same as the one prevalent when the deposit was made.
For instance, Union Bank of India SCSS interest rate as on September 15th, 2020, is 7.4%. So the deposits that are made now will generate interest at the rate of 7.4% till September 2025.
Under Union Bank of India Senior Citizen Savings Scheme, the interest will be paid out on a quarterly basis.
Individuals who are aged 60 years or more are eligible to opt for this scheme. However, there are a few exceptions wherein one can opt for the benefits of this scheme even before attaining 60 years of age –
Note – Members of HUF, PIOs and NRIs are not eligible to open an account under this scheme.
Account-holders under the UBI Senior Citizen Scheme can avail tax benefits pursuant to Section 80C of the Income Tax Act, 1961, up to Rs.1.5 lakh.
However, the earned interest is taxable from the investors’ end. If the aggregate interest amounts to more than Rs.50,000 in a financial year, the tax will be deducted from source.
|Senior Citizen Savings Scheme||Fixed Deposit under Union Bank of India|
|Rate of Interest||7.4% (July to September 2020)||Ranges between 3.50% and 5.95%|
|Maturity Period||5 years||7 days to 10 years|
|Tax Benefit (On Returns)||Taxable||Taxable|
|Tax Benefit (On Investment)||Applicable||Applicable|
|Premature withdrawal||After 1 year (1.5% charge)||1% penalty on deposits exceeding Rs.1 crore|
One should undertake an investment decision only after taking the above points into consideration.
A UBI Senior Citizen Scheme account can be opened by submitting Form A along with these supporting documents –
The supporting documents will also need to be self-attested.
The Senior Citizen Savings Scheme can be opened in Post Offices as well, and the earned interest will be credited to the linked account of the depositor. Thus, retired individuals can easily opt for the benefits of this scheme to maintain a steady inflow of cash and effectively meet their cost of living.