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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Minimum deposit for Sukanya Samriddhi account has changed

An important intervention and helps further the government’s Beti Bachao-Beti Padhao Campaign. The minimum deposit for government-backed small savings scheme for the girl child, Sukanya Samriddhi, has been slashed to Rs 250 from Rs 1,000. This means that customers need to make a minimum annual deposit of only Rs 250 in this account, reported news agency Press Trust of India. The maximum yearly deposit, however, stands unchanged at Rs 1,50,000. Under the Sukanya Samriddhi Yojana, a parent or legal guardian can open the account in the name of the girl child until she attains the age of 10 years.


Here are some facts you should know about Sukanya Samriddhi Scheme:

“The most recent modifications to the Sukanya Samriddhi Account Rules, 2016 is a welcome step. The change would foster financial inclusion of parents, especially the rural poor who want to secure the future of their daughters but have limited funds. This positive initiative is an important intervention and helps further the government’s Beti Bachao-Beti Padhao Campaign,” said Rahul Aggarwal, Director, Wealth Discovery.
The interest rate on Sukanya Samriddhi Yojana has been fixed at 8.1 per cent per annum for the September quarter.The interest on Sukanya Samriddhi Yojana is calculated on a yearly basis and is compounded annually.
The banks that have been authorized to open accounts under the scheme are: State Bank of India (SBI), Vijaya Bank, United Bank of India, Union Bank of India, UCO Bank, Syndicate Bank, Punjab National Bank, Punjab & Sind Bank, Oriental Bank of Commerce, Indian Overseas Bank, Indian Bank, IDBI Bank, ICICI Bank, Dena Bank, Corporation Bank, Central Bank of India, Canara Bank, Bank of Maharashtra, Bank of India, Bank of Baroda, Axis Bank, Andhra Bank and Allahabad Bank, according to a government notification.

Tax exemption is one of the greatest advantages of the Sukanya Samriddhi Scheme. The deposits made to the account, and also the proceeds and maturity amount would be fully exempted from tax under section 80C of the Income Tax Act.
Sukanya Samriddhi account will also automatically close if the girl child gets married before the completion of the tenure of 21 years. Deposits can be made up to 14 years from the date of opening of the account. After this period the account will only earn interest as per applicable rates.
Withdrawing money before the completion of the maturity period of 21 years can only be made by the girl child in whose name the account has been opened after she attains the age of 18 years. This withdrawal will also be limited to 50 per cent of the balance standing at the end of the preceding financial year, and will only be allowed for the purpose of higher education or if the girl intends to get married. In order to make a withdrawal, the account should have a deposit of at least 14 years or more.
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Sukanya Samriddhi Account | Sukanya Samriddhi Yojana | Sukanya Samriddhi Scheme

Sukanya Samriddhi Account Yojana, also known as girl child prosperity scheme is launched by Prime Minister Narendra Modi. Sukanya Samriddhi account is to ensure a bright future for girl children in India. This yojana is to facilitate them proper education and carefree marriage expenses.  The scheme has well been accepted by the masses in wake of the financial security and independence it would provide to the girl child as well as their parents and guardians. Sukanya Samriddhi Account Yojana offers a small deposit investment for the girl children as an initiative under ‘Beti Bachao Beti Padhao’ campaign.  One of the key benefits of the scheme is that it is quite affordable and offers one of the highest rates of interest. Currently it is set as 9.2% per year for Fy 2015-16 and also SSAY is under the Income tax Act 1961, section 80C.

Sukanya Samriddhi Account Yojana:  Key Pointers
  • Till a girl attains an age of 10 years, the Sukanya Samriddhi account yojana can be opened under her name
  • Only one account under this scheme is permissible for every girl child
  • Walk into any post office or authorized banks to open the account
  • To open an account under SSAY, Birth Certificate of the girl child would be required to submit
  • The opening amount for the account is Rs 250. Thereafter a customer can be deposited to the account with a minimum of Rs 250 per year
  • The maximum limit for deposits in the account is Rs 1,50,000 per year
  • You have to pay in this scheme for 14 years. Suppose you have opened this account when the age of your girl child was X years then you have to pay in this scheme till your girl child age is X +14 years.
  • The maturity duration of the account is 21 years from the date of opening the account.

  • Sukanya Samriddhi Account is transferrable to anywhere in India from a Post office or bank to others.
The scheme comes from Ministry of Finance under its notification GSR 863(E).  This notification was published on 02nd December 2014.  The scheme will operate with the name Sukanya Samriddhi Account Rules, 2014.




Who would be the Depositor in Sukanya Samriddhi Account Yojana
Since this is an account dedicated to the girl child, a parent or guardian of the girl child could be depositor of the account.
Sukanya Samriddhi Account Yojana Scheme
Age limit for opening Sukanya Samriddhi Account
Any legal guardian or parents of a girl child can open Sukanya Samriddhi Account under this scheme anytime at the time of birth of the child till she attains an age of ten years.  As a matter of exception, any girl who attained an age of ten years within one year prior to announcement of this scheme would also be entitled to get this account opened under her name.
As a grace period, any girl born between 02nd February 2003 and 01st December 2004 is also eligible to get an account under the scheme; however, they would have to get the account opened by 01st December 2015.
Documents required for opening of Sukanya Samriddhi Account
The process of opening a Sukanya Samriddhi account is quite simple and not much documentation is required in normal cases.  Here is a list of document a parent or guardian needs to take along when applying for an account under the scheme:
  • Certificate of Birth of the Girl child
  • Proof of Address of parents/guardians
  • Proof of identity of the parents/guardian
Please read more for Documents Required

So, in all, you need just three basic documents and Sukanya Samriddhi Account would be opened for your girl child. 





Where to open Sukanya Samriddhi Account?
The government is still in the process of authorizing various financial institutions for opening of account under this scheme.  However, as of now, you can walk in to any nearby post office or any branch of the banks listed below:
Please read more for Authorized Banks for SSA
Can Account holder choose not to close account after maturity
The normal tenure of the account is up to the age of 21 years of the girl.  However, if she wishes to continue the account further, the maturity amount would grow at the same interest rate as per the scheme’s current rates.  The interest would be compounded on a monthly/yearly basis and would get credited to the account once the girl reaches an age of 14 years.
Who is authorized to operate Sukanya Samriddhi Account?
As mentioned earlier in the article, the account could be opened by the parents of legal guardian of the girl child.  They would be operating the account until the girl child turns 10 years.  After 10 years, a girl child may operate her own account, if she chooses to.
Pre-Mature Withdrawal and Account Transfer in Sukanya Samriddhi Account Yojana
Sukanya Samriddhi Scheme has been launched across India and hence the account is transferrable to any part of the country in situation of the account holder or the depositor moving to other places.
The scheme clearly envisages that a pre-mature amount of up to 50% is allowed for withdrawal after the account holder turns 18 year for the requirement of either marriage or higher education.
In case of marriage of the account holder after 18 years, the operation of the account may not be possible and hence this scheme offers closure of the account after marriage of the account holder.  In that case, an affidavit and relevant proof would be require stating that the girl is above 18 year of age and has been married after that. 


Read More for Withdrawal Rules




Tax Benefits from Sukanya Samriddhi Account Yojana
Any amount that would be deposited in Sukanya Samriddhi Account would be exempted from tax under 80C of IT Act, 1961, till a maximum of Rs 1.5 lakh.  The interest and maturity amount on this account is also exempted from income tax.
The Advantages of Sukanya Samriddhi Account Yojana
  • High and best in market interest rates
  • Full tax benefits under 80C of Income Tax act
  • Maturity amount to be given directly to the girl child
  • Interest would be paid even after maturity of the account, if it is not closed by the account holder or depositor
  • No fixed number of deposits. The depositor can deposit a multiple of Rs 1,000 through out the year, with no limitation on number of deposits.  This is indeed a big advantage of the scheme.
  • Account can be transferred anywhere in India
  • Girl child / Account holder may operate her account, if she wishes to. This would give a lot of financial independence to the girl child as well.

Please read more on SSA Benefits
The shortcomings of Sukanya Samriddhi Account Yojana
  • Lock in period is a little on higher side
  • The account is limited for just two girl child of the parents
  • The scheme does not facilitate online transfer facility and that would be a discomfort for the IT savvy customers
  • No surety account the Rate of Interest in future

Please read more on Drawbacks of SSA
To conclude, the intent of the scheme is quite noble and would certainly provide a lot of financial independence to the girl child as well as their parents and guardians.  At the same time, considering the leverages and flexibilities it provides, we are sure that it would bring a lot of capital to the banks.  The only thing we would not be sure of as of now is how this scheme would be taken by the forthcoming budgets and government at the center.
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