India's largest lender, the State Bank of India (SBI) is known for introducing various deposit schemes in the interest of its customers. Now, in a latest development, SBI has introduced a new Deposit Scheme “SBI WECARE’ for senior citizens. The scheme, SBI WE CARE, aims at protecting the income of senior citizens by offering additional interest on Term Deposits. Issuing an official note, SBI said, "SBI takes pride in its association with Senior Citizens and introduces new Deposit Scheme “SBI WECARE’ protecting their income by offering additional interest on Term Deposits."

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SBI WECARE: The salient features of the scheme are:-

-Purpose: Protecting income of Senior Citizens by providing additional interest on their Term Deposits

-Eligible Customers: Senior Citizens

-Type of Deposit: Domestic Term Deposit

-Period of Deposit: Minimum- 5 years,  Maximum- 10 years

-Interest Rate Additional premium of 30 bps (over and above existing premium of 50 bps) over card rate for Public i.e. 80 bps over card rate for Public.

-Payment of Interest Term Deposit – At monthly/ quarterly interval, Special Term Deposit- On maturity

-Interest: Net of TDS, shall be credited to Customer Account

-Loan Facility Available

-TDS At applicable rate as per Income Tax Act

-Available Through Branch/ INB/ YONO

-Scheme applicable from 12.05.2020

-Scheme valid up to 30.09.2020

Earlier, on May 7, SBI had reduced its MCLR by 15 bps across all tenors with effect from May 10. The one-year MCLR (Marginal Cost of Funds-based Lending Rate) comes down to 7.25 per cent per annum from 7.40 per cent. It is the 12th consecutive reduction in bank's MCLR.

MCLR is the minimum lending rate below which a bank is not permitted to lend. It is an internal reference rate for banks to determine the interest they can levy on loans.

With the cut in MCLR, EMIs on eligible home loan accounts (linked to MCLR) will get cheaper by about Rs 255 for a 30-year-loan of Rs 25 lakh.

The SBI also said that in view of adequate liquidity in the system as well as with the bank, it has also pruned its interest rates on retail term deposits by 20 bps for 'up to 3 years' tenure, effective from May 12, 2020.

But the bank protected the interests of senior citizens in the current falling rate regime, by introducing a new product 'SBI Wecare Deposit' in the Retail Term deposit segment.

Under this new product, an additional 30 bps premium will be payable for senior citizens' retail term deposits with "5 years & above" tenure only. This scheme would be in effect up to September 30, 2020.

Thus, the effective rate of interest for Retail TDS of Senior Citizens will be 50 bps higher for Retail TD of 'below 5 years' tenure than the rate applicable for the general public (no change in premium).

For Retail TD of '5 years & above' tenure (new product) will be 80 bps higher than the rate applicable for the general public (30 bps extra premium). This additional premium will not be payable in case of premature withdrawal of such deposits.