Small Savings Schemes - PPF, NSC, SSY, SCSS Latest Interest Rates


Small Savings Schemes Vs Bank FD:
 As the government hiked interest rates on 3-year time deposits and the Sukanya Samriddhi Scheme, the annual return rates of small savings schemes have increased. These fixed-income schemes are compared with bank FD (fixed deposits). Recently, SBI and Bank of Baroda have also raised their FD interest rates. Here are the latest interest rates on small savings schemes and bank fixed deposits.

The interest rate on PPF stands at 7.1 per cent, that on NSC at 7.7 per cent, and Senior Citizen Savings Scheme at 8.2 per cent.

Latest Interest Rates On Small Savings Schemes:

The interest rates for the January-March 2024 quarter have been fixed as follows:

Savings Deposit: 4 per cent

1-Year Post Office Time Deposits: 6.9 per cent

2-Year Post Office Time Deposits: 7.0 per cent

3-Year Post Office Time Deposits: 7.1 per cent

5-Year Post Office Time Deposits: 7.5 per cent

5-Year Recurring Deposits: 6.7 per cent

National Saving Certificates (NSC): 7.7 per cent

Kisan Vikas Patra: 7.5 per cent (will mature in 115 months)

Public Provident Fund: 7.1 per cent

Sukanya Samriddhi Account: 8.2 per cent

Senior Citizens Savings Scheme: 8.2 per cent

Monthly Income Account: 7.4 per cent.

Small Savings Schemes Vs Bank FD

Bank fixed deposits are time deposits wherein depositors keep their money for a fixed time, let’s say, 6 months, 1 year, 3 years or 5 years. The bank offers fixed annual interest rates on this fixed deposit, and the rates vary based on FD tenure and the depositor’s age.

Currently, HDFC Bank is offering up to 7.75 per cent interest rates on FD, depending upon deposit tenure and depositor’s age. ICICI Bank is offering FD rates up to 7.60 per cent annually and SBI is giving up to 7.50 per cent a year.

What Are Small Savings Schemes?

These are savings instruments managed by the government to encourage citizens to save regularly. Small savings schemes have three categories — savings deposits, social security schemes and monthly income plan.

Saving deposits include 1-3-year time deposits and 5-year recurring deposits. These also include saving certificates such as National Saving Certificates (NSC) and Kisan Vikas Patra (KVP). Social security schemes include Public Provident Fund (PPF), Sukanya Samriddhi Account and Senior Citizens Savings Scheme. The monthly income plan includes the Monthly Income Account.

The interest rates on small savings schemes, including public provident fund (PPF), national savings certificate (NSC) and Kisan Vikas Patra (KVP), are reviewed every quarter.

Interest rates on small savings schemes like PPF, NSC, etc, are now market-linked and moves in tandem with 10-year G-Sec yield.










































































































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Sukanya Samriddhi vs FD vs RD vs PPF vs MF vs insurance: Suitability and pros & cons


From study to choosing a desirable career to marriage, upbringing a child is a huge task, which, apart from care, also needs money. As the rate of inflation in education is more than the rate general inflation, you need to chalk out a financial plan to meet the expenses. There are many financial products available, which you may use judiciously to meet your financial targets. There are also some exclusive financial products available for girl child that the government launched as a part of its ‘Beti Bachao Beti Padhao’ campaign.


Sukanya Samriddhi Yojana
Small deposit scheme Sukanya Samriddhi Yojana (SSY) is aimed at meeting the expenses of higher education and marriage of your daughter. The parents or legal guardians of a girl child may open an account till 10 years of the age of the girl. The account may be closed after 21 years. However, normal premature closure is allowed after completion of 18 years, provided that girl gets married.

Currently, the maximum amount may be invested in an SSY in a financial year is Rs 1,50,000. The amount invested is eligible for tax deductions u/s 80C as well as the interests earned and the maturity amounts are also tax free.

The government declares the rate of interest for SSY accounts on quarterly basis and generally keeps it higher than other small savings schemes like NSC, KVP, PPF etc. At present, the rate is 8.5 per cent, which if continues to remain same, would generate a corpus of Rs 74,96,802 at the end of 21 years, if Rs 1,50,000 is invested at the beginning of every year for 15 years.

Sukanya Samridhhi Yojona is a very suitable product for girl child, as it is tailor made for them. It also provides handsome rate of return and overall tax benefits. However, the long tenure and restrictions on withdrawals make it an illiquid investment.

Bank Fixed Deposits
For investing in fixed deposits (FDs) you need to have lump sum money in your hand. FDs are one of the most popular choices in India. Most people invest in FDs because they are easy to get from the banks that have created immense trust in the mind of the account holders. However, FDs don’t provide protection against inflation and the interest earned are also taxable.

With highest interest rates on FDs varying between 6 and 7 per cent apart from tax and inflation inefficiency, FDs may not create enough wealth that is needed for your daughter’s higher education and marriage purpose. So, you may use FDs only to park small amount of excess money to meet the associated expenses.

Recurring Deposits
Although, recurring deposits (RDs) are a modified version of FDs, where you may invest periodically on small amount instead of lump sum one, but it is a better option to park the small amount of money that you may save every month. As it may not be convenient for you to save large amount in FD regularly, the small amounts in vested in RD may come handy when you need some lump sum money for expenditure. However, like FDs, RDs are also tax and inflation inefficient.

Public Provident Fund (PPF)
It is a good idea to open a PPF account in the name of your girl child and divide the money you want to invest in it between your and your daughter’s account (maximum Rs 1,50,000 may be invested by a PAN card holder, be it in one account or more accounts). However, it would be even better if you open an SSY account for your daughter instead of bifurcating your investment for retirement. Otherwise, with tax deductions on investment and tax-free interest and maturity, along with pretty good interest rate, PPF is a good vehicle for accumulating a corpus.


Mutual Fund (MF)
As the goal of higher education and marriage of your daughter are a long-term goal, you may start SIPs in equity mutual funds safely to get a return that beats the inflation. But you should not get panicked by daily turmoil in markets, which affect the NAVs of mutual funds in short term. Start monitoring the NAVs of the funds a year before your daughter is about to get admission for higher education or about to get married, so that you may redeem you funds at good value. There are also some child specific funds available with longer lock-in period and higher exit loads if redeemed before the duration for which the fund is taken to discourage early withdrawal of money for any other purpose than meeting the needs of the child.

Insurance
There are many child insurance products available in the market in the form of money back plans or regular plans. One of the important feature of child insurance is the premium waiver benefit (PWB), which allows the insurance to continue even without paying premium in case of untimely demise of the earning member, who used to pay the premium. However, there is no point in taking insurance on child’s life, as it is not the motive of child insurance to get lump sum money in case of death of the insured child. So, it’s better to take insurance on your life, making daughter the nominee.

So, along with other investments, better to take a term insurance plan. Otherwise, even a unit-linked insurance plan (ULIP) would be a good option. There are, however, options available to take PWB in some endowment plans even on your life, which also provide additional risk covers like instant payout of sum assured (SA) along with yearly payout of certain percentage of SA apart from the maturity benefits, if taken judiciously with term rider, accidental rider, PWB etc. For example, in case of a 20-year policy of Rs 10 lakh SA, taken with all the riders, if the insured person dies due to accident in the very first year, total payout would be as much as 6 times the SA, that is Rs 60 lakh. Such plans may prove even better than term plans because the nominee would get immediate lump sum payment to clear debts, if any, and to make some investments, then regular yearly payments to bear child’s expenses and finally, lump sum payment again on maturity to meet expenses for higher education and marriage. In case the life insured survives the full policy term, he or she will get lump sum maturity benefit, which, along with bonus, would be around twice the SA, that is around Rs 20 lakh. But such plans are expensive due to high risk cover.



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Small savings interest rate cut by 0.2%

The government on Wednesday cut the interest rate on small savings schemes, including public provident fund (PPF), national savings certificate (NSC) and Kisan Vikas Patra, by 0.2 percentage points for the January-March quarter, a move that will prompt banks to lower deposit rates.
Interest rates in the five-year Senior Citizens Savings Scheme, however, has been retained at 8.3%. The interest rate on the senior citizens’ scheme is paid quarterly.
A finance ministry notification said interest rates have been reduced across several small savings schemes but that for savings deposits has been retained at 4% annually.
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What is the Public Provident Fund (PPF) Scheme?

The Public Provident Fund (PPF) Scheme, 1968 is a tax-free savings avenue that was introduced by the Ministry of Finance (MoF) in India in the year 1968. Interest earned on deposits in the PPF account are not taxable. Deposits made towards PPF accounts can be claimed as tax deductions. This makes the PPF Scheme one of the most tax efficient instruments in India. It was launched to encourage savings among Indians in general, especially to encourage them to create a retirement corpus.
Public Provident Fund (PPF) Accounts
People can deposit funds in PPF accounts (Public Provident Fund accounts) for a fixed period of time to earn returns on their savings. The current PPF interest rate the financial year 2015 - 2016 is 8.7% p.a. Since this scheme was launched to encourage savings across income classes, minimum deposit requirements are very low and affordable. They are also tax-free accounts, easily accessible, safe (being backed by the government) and simple to understand, making them a popular investment avenue for a large majority of individuals in India.
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