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Bank of Baroda, the country’s leading public sector lender, has made short-term savings extremely attractive and profitable for its depositors. Amidst the ongoing huge fluctuations in the stock market, global economic uncertainties and increasing risks in mutual funds, common investors are once again returning to guaranteed returns and 100% protection of capital. Bank of Baroda’s special FD scheme of ‘271 days to less than 1 year’ has emerged as the most preferred option, especially for pensioners, retired employees and middle class families living in major residential areas like Hazratganj, Gomti Nagar, Aliganj and Mahanagar of Lucknow, the capital of Uttar Pradesh. This period sits exactly around 9 months, which neither locks the money for too long nor for too short a period. If an investor needs cash after 9 months for the upcoming festive season, children’s upcoming semester fees, wedding celebrations or to pay the next installment of a property, then this 271 day fixed deposit scheme is proving to be the surest and safest means of earning maximum return on his capital without any market risk.
As per the official interest rate table of Bank of Baroda, an attractive interest rate of 6.00 per cent per annum is being offered to general citizens for tenures ranging from 271 days to less than 1 year (except special buckets of 333 and 360 days). At the same time, senior citizens aged 60 years and above are being given direct interest of 6.50 percent per annum by giving an additional benefit of 50 basis points i.e. 0.50 percent. If we compare this with the previous slab of 211 days to 270 days, where general customers got 5.75% interest and senior citizens got 6.25% interest, then there is a direct jump of 25 basis points in the interest rate as soon as we enter the 271st day. For retail deposits of less than Rs 3 crore, this rate is extremely competitive with any major public sector bank. The bank gives a callable (premature withdrawal) option in this scheme, due to which in case of emergency, the depositor can withdraw his amount by paying a nominal penalty. The assured return of 6.50% in the short term acts as a solid financial shield to support the income of senior citizens.
In the current economic scenario, maintaining liquidity is considered the most prudent thing. When investing money in a long term FD of 3 to 5 years, there is often a fear that if the interest rates increase further, there will be a loss at the old rate or if it is broken midway, there will be a huge loss. On the other hand, usually only 4.5% to 5.5% interest is available on FD of 3 to 6 months, which becomes weak in front of inflation. In such a situation, the time period of 271 days is considered a ‘sweet spot’ in the eyes of financial planners. This 9 month tenure gives the investor the freedom to earn more than double the interest on his surplus funds compared to a bank savings account (which gives only 2.75% to 3%). Also, when this FD matures, investors can easily re-allocate the funds to any other long-term plan, real estate down payment or gold bonds as per the new market trends.
Bank of Baroda not only offers higher interest rates for senior citizens, but also provides them complete freedom to manage cash flow as per their financial needs. Elderly depositors can choose from several interest payment options as per their requirement. They can choose to take a lump sum interest on maturity (cumulative option), where the interest gets the benefit of compounding, or choose monthly or quarterly pay-outs to pay for their medicines, household ration and everyday bills. Additionally, the Bank offers additional benefits for Super Senior Citizens above 80 years of age in select periods. This scheme is also suitable for pensioners because being a government bank, the principal and interest amount up to Rs 5 lakh deposited in Bank of Baroda is fully insured and secured by DICGC, due to which there is not even the slightest risk of default like any private bank or NBFC.
Let us now understand through the FD calculator how much net profit will actually be made by investing money in this scheme for 271 days. Suppose an ordinary citizen of Lucknow deposits an amount of ₹ 5,00,000 in Bank of Baroda at 6.00% per annum for 271 days. At the end of 271 days, he will get net interest of around ₹22,274 and his maturity amount will increase to ₹5,22,274. At the same time, if the same ₹ 5 lakh is deposited by a senior citizen for 271 days at the rate of 6.50%, then he will get a total interest of ₹ 24,130, making his total fund ₹ 5,24,130. This means that in just 9 months, a guaranteed additional income of more than Rs 24 thousand is ensured. Additionally, for investors who can stay a little longer, Bank of Baroda’s ‘Bob Square Drive’ (444 days) scheme at 6.45% to 6.95% and ‘Bob Golden Goal’ (555 days) Special Scheme at 6.75% to 7.25% are also offering the highest returns, but the 271 day FD remains the most popular for getting big returns in a short period of time without the risk.
Opening this 271 day FD in Bank of Baroda is very simple and completely digital. Existing account holders can open this account from home by logging into the bank’s popular mobile app ‘BOB World’ or internet banking portal and selecting ‘Open Fixed Deposit’ option in just two minutes. There is no need for any paperwork or branch visit. At the same time, senior citizens who feel uncomfortable using digital platforms can get an instant FD receipt by visiting their nearest bank branch, filling a simple form and depositing the cheque. One thing to keep in mind on the tax front is that as per Income Tax rules, if the interest income from FD in a financial year exceeds ₹ 40,000 for general citizens and ₹ 50,000 for senior citizens, then the bank deducts TDS as per rules. If your total annual income is less than the taxable limit, to avoid deduction of TDS, general citizens can submit Form 15G and Senior Citizen Form 15H in the bank online or offline at the beginning of the financial year, thereby getting their entire interest directly transferred to their account without any tax deduction.