Canara Bank Interest Rate for Senior Citizens
As we grow older, we need to ensure that our financial future is secure. To cater to the needs of senior citizens, Canara Bank offers a specialized Recurring Deposit (RD) scheme. In this article, we will discuss everything you need to know about the Canara Bank Recurring Deposit Scheme for senior citizens.
Purpose of the Canara Bank Recurring Deposit Scheme for senior citizens
The primary purpose of this scheme is to provide senior citizens with a safe and secure investment option that guarantees a steady source of income. The scheme aims to offer an attractive rate of interest on deposits made by senior citizens, which can help them in building a corpus of funds for their future.
Canara Bank Senior Citizen RD Interest Rates 2024
The interest rate offered under this scheme is among the highest in the market and it is subject to revision from time to time. Currently as of July 2024, the interest rate for the Canara Bank Recurring Deposit Scheme for senior citizens ranges from 6.65% to 7.20% per annum. This interest rate is subject to change and depends on the prevailing market conditions.
| RD Tenure | Interest Rate |
|---|---|
| 6 Months | 6.65% |
| 9 Months | 6.75% |
| 12 Months | 7.35% |
| 15 Months | 7.35% |
| 24 Months | 7.35% |
| 27 Months | 7.35% |
| 36 Months | 7.30% |
| 39 Months | 7.30% |
| 48 Months | 7.30% |
| 60 Months | 7.20% |
| 90 Months | 7.20% |
| 120 Months | 7.20% |
Canara Bank Senior Citizen RD Account Eligibility Criteria
To be eligible for the Canara Bank Recurring Deposit Scheme for senior citizens, the applicant must be a senior citizen which means he should be 60 years or above.
Canara Bank Senior Citizen RD Account Documentation
To apply for the Canara Bank Recurring Deposit Scheme for senior citizens, one needs to submit the following documents:
- Application in the Banks prescribed form.
- Copy of PAN Card / Form 60 or 61 (if customer does not have PAN Card).
- Identity proof, which can be a Voter ID card, PAN card, Aadhaar card, or passport.
- Address proof, which can be a Voter ID card, Aadhaar card, or passport.
- Age proof, which can be a birth certificate or any government-issued document that states the applicant's age.
- Passport size photograph (2 copies).
Canara Bank Senior Citizen RD Amount
The minimum amount required to open an RD account under this scheme is Rs.50. However, there is no upper limit on the amount that can be deposited. Deposits can be made in multiples of Rs. 50. A fixed amount is required to be deposited by way of monthly instalments deposited over a stipulated period.
| Canara Bank Senior Citizen RD | Amount |
|---|---|
| Minimum monthly instalment | Rs.50 |
| Additional monthly instalment | Rs.50 thereof |
| Maximum monthly instalment | No upper limit |
Canara Bank Senior Citizen RD Account Tenure
The minimum tenure for the Canara Bank Recurring Deposit Scheme for senior citizens is 6 months and the maximum tenure is 10 years (multiples of 3 months). However, premature withdrawals are allowed, but the interest rate applicable in such cases will be lower than the rate applicable for the entire tenure.
Canara Bank Senior Citizen RD Account Premature Withdrawal
The Canara Bank Recurring Deposit Scheme for senior citizens allows for premature withdrawal, subject to certain conditions. The bank will charge a penalty of 1% on premature withdrawal of deposits. The prematurely closed Recurring Deposits will earn interest at 1.00% below the interest rate as ruling on the date of deposit and as applicable for the period run.
Canara Bank Senior Citizen RD Account Penalty for Delayed Payment
In case of delayed payment of installment, the bank charges a penalty of Rs.1.50 per Rs. 100 installment per month for RD accounts upto 5 years and a penalty of Rs.2 per Rs.100 installment per month for RD accounts above 5 years.
Overdue Deposits
If the proceeds of the account remain unpaid after its maturity, the amount left unclaimed with the bank will be given the rate of interest as applicable to savings account or the contracted rate of interest on the matured deposit, whichever is lower.
Benefits of the Canara Bank Recurring Deposit Scheme for Senior Citizens
- High-interest Rate: The interest rate offered under this scheme is higher than regular RD schemes.
- Tax Benefits: Senior citizens can claim a deduction of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act, 1961, on the amount invested in this scheme.
- Flexible Tenure: The scheme offers a flexible tenure ranging from 6 months to 10 years.
- Nomination facility: The scheme allows nomination facility to ensure the easy transfer of the RD amount to the nominee in case of the depositor's unfortunate demise.
The Canara Bank Recurring Deposit Scheme for senior citizens is an excellent investment option for those who want to secure their financial future. The scheme offers an attractive interest rate, flexible tenure and tax benifits to all its customers.
Features of the Canara Bank Senior Citizen RD
| Canara Bank Senior Citizen RD | Features |
|---|---|
| Eligibility | Applicant must be of 60 years of age or above |
| Amount of RD | Minimum Rs.50/- per month and in multiples of Rs.50 thereof, no limit on maximum amount |
| Tenure | Minimum 6 months and Maximum 120 months (multiples of 3 months) |
| Nomination Facility | Available |
| Loan Facility | Available upto 90% of the available deposit balance |
| TDS | Applicable as per prevailing Income Tax rules |
| Penalty for Delayed Payment | Up to Rs.2 per Rs.100 installment per month |
Loan Facility Available Against Canara Bank Senior Citizen RD
Canara Bank offers a beneficial feature for senior citizens having Recurring Deposit (RD) accounts to avail up to 90% loan against their RD balance. This facility is particularly a good option for senior citizens who require funds urgently but do not want to break their RD and lose the interest benefits.
How It Works?
When you have an RD account with Canara Bank, you accumulate savings over time due to regular monthly deposits and earning interest on your deposits. In situations where immediate funds are required e.g. for medical emergencies, personal needs or other financial obligations, Canara bank allows you to take a loan against your RD balance. The loan amount can be as high as 90% of the RD balance.
Benefits of Loan Facility Against RD
- Interest Benefits: One of the primary advantages is that the RD continues to earn interest even when you take a loan against it. This means you do not have to break the RD prematurely, lose the interest and pay penalty.
- Lower Interest Rates: Loans against deposits are offered on lower interest rates as compared to personal loans, etc. and hence it is a cost-effective borrowing option for senior citizens.
- Quick Processing: The process of availing a loan against an RD is very quick as the bank already holds the deposit and other personal documentation of the investor so the approval is very fast and you get the loan without any delay.
- No Need for Collateral: Since the RD itself works as collateral, there is no need for senior citizens to pledge any other security for getting the loan.
Rules & Regulations for Recurring Deposit
- Depositor Needs to fulfil KYC norms as per RBI directive.
- Senior Citizen interest rates are applicable only for domestic deposits.
- The depositor has to deposit the monthly installments regularly till the maturity of RD account.
- In case the depositors failed to deposit Installment regularly, penalty will be levied.
- The maturity proceeds of the RD account is usually paid with in 30 days from the date of last instalment deposited.
- It is very important to submit your maturity instructions which should be clear. If you want the RD amount to be credited to your savings account or to be used in opening of a fixed deposit, you need to inform the bank in advance.
- Standing instruction will be accepted for transfer of monthly installments from other accounts maintained by the account holder.
- Penalty will be applicable, if the amount is withdrawal before maturity.
Factors to Consider Before Applying for Recurring Deposit
- Tenure of recurring deposit account
- Interest rate offered by the bank
- Conditions for premature withdrawal
Documents Required for Canara Bank RD for Senior Citizens
- Identity Proof (any one): Passport, Driving License, Voter ID Card, Government Approved College/university I.Card, Government/Semi government/Department I.Card Aadhar Card
- Address Proof(any one): Electricity Bill (not more than 2 months old), BSNL Landline Telephone Bill (not more than 2 months old), Municipal Tax Bill, Voter ID card, Aadhaar card, or passport, other proof acceptable by Bank.
- Passport Size Photograph: 2 Copies
- Pan Card or / Form 60 or 61 (if customer does not have PAN Card)
- Form 15H to avoid TDS
- Age Proof Certificate: which can be a birth certificate or any government-issued document that states the applicant's age.
Rules for Renewal of Recurring Deposit
Renewal of RD is a simple process. Renewal of the RD is one of the most common options available to the depositors after the maturity of an RD. Senior citizens should be aware of the rules for the renewal of RDs before investing in them. They should check the tenure, renewal options, terms and conditions, premature renewal, etc. to make an informed decision. A well-researched investment can provide financial security and peace of mind to senior citizens.
- Depositors can choose to renew their RD for the same duration or for a different duration.
- Depositors have the facility to renew their RD either online or by visiting their bank branch.
- No additional documentation is required for renewal if the RD is automatically renewed or if you are renewing it through the bank's online platform. However, minimal documentation may be needed if you are doing manual renewal at the branch.
- Some banks have the option of auto-renewal of RD. Auto-renewal of RD means that the renewal of the RD will happen automatically on the date of maturity for the same duration as the original RD. The interest rate applicable will be the prevailing rate at the time of renewal.
- The interest rate for the renewed RD will be based on the rates prevailing at the time of renewal. It is important to know that the current rates may differ from the rates of your original RD.
- If you need funds, some banks allow partial withdrawal of the RD amount before renewal.
- The interest earned on the renewed RD will be subject to tax and you need to consider the same for the accounting purpose.
Safety of Recurring Deposit Funds
The Deposit Insurance and Credit Guarantee Corporation, a subsidiary of the central bank, guarantees investments in recurring deposits of up to Rs 5 lakh for all the member banks.
Tax Benefit under Canara Bank RD for Senior Citizens
It is important to note that senior citizens can claim a tax deduction of up to Rs. 1.50 lakh under Section 80C of the Income Tax Act, 1961, on the amount invested in RD schemes for senior citizens, if the RD tenure is atleast 5 years. This tax benefit makes these schemes more attractive to senior citizens who are looking for safe investment options that offer tax benefits.
TDS Under Canara Bank RD for Senior Citizens
Senior citizens need to understand the tax implications of investing in RDs before making any investment in RD. Tax Deducted at Source (TDS) is a tax that is deducted from the interest earned on an RD. In this article, we will discuss the TDS rate on Recurring Deposit for senior citizens.
The TDS rate on Recurring Deposit for senior citizens is 10% of the interest earned, provided that the interest income is more than Rs. 50,000 per annum.
This limit was increased from Rs. 10,000 to Rs. 50,000 in the 2018 Union Budget, providing relief to small depositors. It is important to note that this limit is applicable to the total interest earned by the senior citizen in a financial year, including interest from savings accounts, fixed deposits, and recurring deposits.
Senior citizens can avoid TDS by submitting Form 15H to the bank. This form is a declaration stating that the senior citizen's total income for the financial year is below the taxable limit, and hence no TDS should be deducted. It is important to note that Form 15H needs to be submitted to each bank where the senior citizen holds an RD account.
If TDS is deducted from the senior citizen's RD account, they can claim a refund by filing their income tax return. The TDS amount will be considered as advance tax paid by the senior citizen and will be adjusted against their final tax liability. If the TDS amount is more than the final tax liability, the senior citizen can claim a refund of the excess amount.
Role of Senior Citizens RD in Financial Planning
No Risk of Loss
RDs does not have any risk of principal loss unlike stocks or mutual funds. The invested amount is safe and the returns are assured. This feature is particularly important for retirees who cannot afford to lose their savings.
Creation of Big Corpus
The maturity amount from RDs can be used as a supplementary income after retirement. It can be used to meet regular expenses, medical bills or any other financial needs.
Tax Benefits
Investments in RDs for the tenures 5 years and above also come with certain tax benefits under Section 80C of the Income Tax Act for providing additional financial relief for retirees.
Supplementary Income
If you invest the funds accumulated under RD account in any systematic withdrawal plan or monthly income plan, then you can use it as an additional monthly income in addition to any pension income which you receive.
Flexible Tenure
RDs offer flexibility in selecting tenure which allows senior citizens to choose a period according to their financial goals. Whether it's short-term goals or long-term targets, the investors can select an RD tenure that suits their needs so that the funds can be available when required.