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Kolkata, Aug. 31

United Bank of India (UBI) has sought to bundle insurance with its tax-saving term deposit scheme.

The bank's new initiative to mobilise deposits comes with free accident insurance for depositors who intend to make use of Section 80C of the Income-Tax Act.

The I-T Act recently provided for the deduction of an amount not exceeding Rs one lakh to individuals or HUFs with respect to sum paid or deposited in specified schemes. The specified schemes, in addition to LIC and PPF, include certain term deposit products offered by banks. In this case, it is UBI's 8 per cent five-year tax-saving deposits.

Depositors, a press note issued by UBI has said, will be able to choose from among two options. The first is being treated as a growth plan, under which interest will be compounded periodically but paid on maturity. The second option is an income plan, under which interest will be paid periodically. The applicable rate of interest is 8 per cent in both cases.

For deposits of Rs 20,000 or more, depositors will be provided insurance coverage of Rs 1 lakh for accidental death under United Suraksha Yojana. Also, they will be able to get zero-balance savings accounts with free ATM-cum-debit cards.

For both schemes, the minimum deposit is Rs 100, while the maximum is Rs one lakh. Accounts may be opened jointly too, the press note said.

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(This article was published in the Business Line print edition dated September 1, 2006)
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