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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.

Features of the Union Bank of India Senior Citizen Savings Scheme

Among other savings options offered by various financial institutions, this scheme is one that is wrought with benefits and attractive features. These include –

  1. The maturity tenure under the scheme is 5 years which may be further extended by another 3 years.
  2. The deposit that may be made in this account ranges from Rs.1000 to Rs.15 lakh. The maximum limit of Rs.15 lakh cannot be exceeded.
  3. It is only the first account holder who stands to receive the matured amount in case of a joint account.
  4. Nominees can be more than 1 person.

Eligible customers with the bank can open an account under this scheme and avail the attractive Union Bank of India SCSS interest rate.

Rate of Interest against UBI Senior Citizen Scheme

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 –

QuartersRate of Interest
(FY 2020-21 Q2) July to September7.4%
(FY 2020-21 Q1) April to June7.4%
(FY 2019-20 Q4) January to March8.6%
(FY 2019-20 Q3) October to December8.6%
(FY 2019-20 Q2) July to September8.6%
(FY 2019-20 Q1) April to June8.7%
(FY 2018-19 Q4) January to March8.7%
(FY 2018-19 Q3) October to December8.7%
(FY 2018-19 Q2) July to September8.3%
(FY 2018-19 Q1) April to June8.3%

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.

Eligibility to Invest into UBI Senior Citizen Scheme

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 –

  • If an individual is above 55 years but is less than 60 years of age, provided retirement is on account of VRS or superannuation.
  • Retired Defence Services personnel having attained 50 years (Civilian personnel of the service excluded).

Note – Members of HUF, PIOs and NRIs are not eligible to open an account under this scheme.

Taxability of Senior Citizen Saving 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.

Comparison between Senior Citizen Saving Scheme and Fixed Deposit 

Senior Citizen Savings SchemeFixed 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 years7 days to 10 years
Tax Benefit (On Returns)TaxableTaxable
Tax Benefit (On Investment)ApplicableApplicable
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.

Documents Required to Start a UBI Senior Citizen Scheme Account

A UBI Senior Citizen Scheme account can be opened by submitting Form A along with these supporting documents –

  1. Identity proof like passport, PAN card etc.
  2. Address proof like Aadhaar card, telephone bill. Etc.
  3. Age proof like Voter ID, birth certificate etc.
  4. Passport size photographs

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.

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