List of Small Saving Scheme and their Current Interest Rate FY 2017-18
In a recent report the Central Government of India has declared the reduction of 10 basis points in interest rates for all the small saving schemes in India. The rate has revised after 3 months of usual time and it shows further reduction in the interest rate compare to last revision in March 2017. In last few years the investment in small saving schemes has been increased immensely. In this situation cutting off the rate of interest may have an adverse effect on the economy, especially for the retired population of the nation.
What is small saving scheme?
Small saving scheme is a money saver scheme, runs by central and state government of India, to save money for the future. There are a number of small saving schemes such as Public Provident Fund, Post Office Recurring Deposit, Post Office Fixed Deposit and such. There are other schemes for retired people as well that help them to save money in small/large amount for their future, preferably after retirement.
In these saving schemes minimum of INR 500 needs to be kept in a year unlike other bank deposits. The highest amount of money can be maintained is INR 1 Lac or 1.5 Lac. They not only help to maintain low account balance for a poor people also these accounts provide tax benefits.
National Saving Certificate
National saving certificate is a piece of paper or saving bond that is given to the person who is availing small saving schemes. This certificate is initially given to save the income tax burden. Mostly the certificate is useful for the under privileged people across the nation.
Types of Small Saving Schemes:
- Public Provident Fund: This works as a provident fund for the adults as well as minorities. The PPF has lower limit of balance holding INR 500 and upper limit of INR 1.5 Lac. Any amount above the upper limit will not ear any interest. The maturity time of PPF account is 15 years.
- Post Office Recurring Deposit: Post Office RD is a saving scheme that can be continued with Indian Postal Offices. In this scheme minimum balance of Rs. 10/- should be maintained every month. There is no upper limit in this account. Minors, joint account and single account can be maintained here.
- Post Office Fixed Deposit: Fixed deposits in Post Offices are same as the banks. The difference is the minimum amount here is INR 200/- unlike the other commercial banks.
- Kisan Vikas Patra: This is another small saving scheme that can be purchased from the PO. The patra or certificate costs INR 1000/- (minimum). There is no upper limit of investing in KVP. The maturity time is 113 months.
- Others: Other schemes such as senior citizens, sukanya samriddhi and monthly income schemes are also available under small saving schemes in India.
Interest Rates of these small saving schemes:
The rate of interest of these schemes is different for different accounts. As per the government rule in every three months of interval, the rate of interest of small saving schemes must be revised. Either it can be increased or can be reduced. Looking at the economic condition, the rates are being regulated.
List of Small Savings Scheme
|Sno||Name||Full Form||Interest Rate|
|1||NSC||National Saving Certificate||7.80%|
|2||PPF||Public Provident Fund||7.80%|
|3||SSY||Sukanya Samriddhi Yojana||8.30%|
|4||Post Office RD||7.10%|
|5||KVP||Kisan Vikas Patra||7.80%|
|6||SCSS||Senior Citizens Savings Scheme||8.30%|
|7||MIS||Monthly Income Scheme||7.60%|
|8||TD||Time Deposits||6.9 to 7.7%|
|9||Post Office Savings Account||4%|
- PPF: As per dated 1st of April 2017, the rate of interest for the scheme was 7.9%. After the recent revision the rate has reduced by 10 basis points and reached to 7.8% per annum.
- Post office recurring deposit: It was 7.2% as on 01.04.2017, now after the revision of the interest rates it has reduced to 7.1% per annum.
- Post Office Fixed Deposit: The rate of Post Office FD was 7.7% maximum (in the 5th year of deposit) has now been reduced to 7.6% per year.
- Kisan Vikas Patra: The interest rate for the KVP has also been reduced by 0.01. The earlier rate was 7.6% that has become 7.5% per annum from now onwards.
- Others: The sukanya samriddhi will gain 8.3% instead of 8.45 per annum like earlier times. Also senior citizen saving scheme will attract 8.3% instead of 8.4% from now onwards. NSC will gain 7.8% instead of 7.9% from this month.
During March 2017, the interest rate has been reduced too. This month, in June 2017, it is reduced further. The policy makers have stated that the rates are higher than desirable. This can lead to imbalance in the economy and investments. The 10-years bond yield gains 6.5% interest rate per annum. This is considered as the benchmark for other schemes. According to the policy makers the rate for PPF should not cross 7% per annum. That is why the government is reducing small percentage of points in each quarter to reach the desirable interest rates for the small saving schemes.