SBI or State Bank of India offers an auto debit facility for a customer to make contributions to his or her National Pension System (NPS) account.
This was said by the country’s largest bank, SBI on Twitter. NPS – which has no fixed rate of interest – offers market-linked investment return with the option of making adjustments in a portfolio.
SBI’s auto-debit – or auto withdrawal – facility enables the user to instruct the bank to make NPS contributions at regular monthly intervals, according to SBI.
Types of NPS accounts
NPS offers two types of accounts: Tier 1 and Tier 2. While the Tier 1 NPS account is strictly a pension account which doesn’t allow withdrawals, the Tier 2 account – known as investment account – allows withdrawals. The Tier 1 NPS account offers tax benefits while the Tier 2 NPS account doesn’t offer any such benefit.
An NPS account can be opened by individuals between 18 and 65 years of age.
Different types of choice of investment
Under NPS, the investor gets to decide where to put the money. That means the subscriber can decide his preferred weightage in asset classes such as equity funds and government securities.
SBI’s auto debit or standing instruction (SI) facility is comparable with the SIP or Systematic Investment Plan (SIP) facility that enables the investor to park funds in mutual funds by paying a sum of money at equal intervals. Interested subscribers can register for standing instruction (auto debit) – to have the bank process their monthly NPS contributions – either in online or offline modes. While registering for the auto debit facility online, the user is required to access the ‘NPS Contribution’ option available on SBI’s internet banking portal – onlinesbi.com. In the offline mode, the investor can fill out and submit a physical form to an SBI branch registered for NPS.
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