State Bank of India (SBI) recently launched the Amrit Vrishti Scheme, a term deposit offering designed to provide an attractive interest rate of 7.25% annually.
This scheme is available for deposits for a fixed tenure of 444 days and caters to domestic and non-resident Indian customers. Effective July 15, 2024, the scheme offers an additional 0.50% interest for senior citizens, making it a compelling option for retirees seeking higher returns on their savings.
Accessibility and Availability of the Amrit Vrishti Scheme
One of the standout features of the Amrit Vrishti Scheme is its ease of access. Investors can conveniently invest in this scheme through multiple channels, including SBI branches, the YONO SBI and YONO Lite mobile banking apps, and SBI’s internet banking platform.
This wide range of access points ensures that both tech-savvy customers and those who prefer traditional banking methods can participate. The scheme is open for investment until March 31, 2025, providing ample time for retail investors to take advantage of the competitive interest rates.
Evaluating the Investment Viability of the Amrit Vrishti Scheme
While the headline interest rate of 7.25% per annum may appear attractive, it’s essential to assess the scheme’s effectiveness in real terms.
After accounting for taxes, the actual returns could potentially fall short of beating inflation, thereby eroding purchasing power over time.
Additionally, the 444-day tenure limits the benefits of compounding interest, which typically requires a longer investment period to maximize growth.
Investors should carefully consider these factors, especially if they are seeking long-term wealth accumulation.
Expert Insights and Considerations
Hiren Thakkar, a Chartered Accountant and Proprietor of Hiren S Thakkar & Associates, provides valuable insight into the Amrit Vrishti Scheme.
According to Thakkar, the scheme offers a pre-tax internal rate of return of 7.80% and a post-tax return of approximately 7.75%.
For an initial investment of ₹1,00,000, investors can expect earnings of around ₹9,787 over the 444-day period.
However, the relatively short investment horizon limits the potential for substantial compounding, which is crucial for long-term investment growth.
Consequently, the scheme may be better suited for senior citizens or investors with short-term financial goals, seeking a stable and reasonable return on their savings.
Conclusion
The SBI Amrit Vrishti Scheme presents an intriguing option for investors, particularly senior citizens, looking for a short-term, fixed-return investment. However, potential investors should carefully evaluate the scheme’s returns relative to inflation and the limited benefits of compounding before committing funds. With the investment window open until March 31, 2025, there is ample time to consider whether this scheme aligns with individual financial goals and risk tolerance.