Small Savings Schemes

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    • The Central government recently raised interest rates on eight of the 12 small savings schemes by 20 to 110 basis points.

    What are Small Savings Schemes

    • Small savings schemes are designed to provide safe and attractive investment options to the public and at the same time to mobilise resources for development.
    • These schemes are operated through about 1.54 lakh post offices throughout the country.
    • These small savings schemes are rolled out by the public/private sector banks, the government of India, and financial institutions. 
    • The interest rate for these schemes is decided by the banks or the government and it is updated periodically.

    Advantages of Small Savings Schemes

    • Long-term benefits: Individuals can achieve their long-term goals such as retirement plans, children’s education, and children’s marriage by investing in savings schemes.
    • Various savings schemes: 
      • The number of savings schemes currently available is large. 
      • The benefits vary according to the scheme and the sector. For example, the Pradhan Mantri Jan Dhan Yojana is designed to help people who are below poverty line and the Sukanya Samriddhi Yojana helps a girl child financially.
    • Hassle-free: The maintenance and investment towards the schemes are very simple and most of the contributions made towards the schemes can be done online.
    • Security and safety: The contributions that are made towards the schemes are minimal on risk as well as safe and secure since the schemes are launched by the Indian Government.

    Some Small Saving Schemes in India

    • Post Office Monthly Income Scheme (MIS)
      • Here we can invest a certain amount and receive a fixed amount of interest every month. 
      • We can invest in this scheme from any post office.
    • National Savings Certificate (NSC)
      • This tax saving investment can be purchased from any post office. 
      • It is a low-risk investment that guarantees fixed return. 
      • Backed by the Indian government, this investment scheme is preferred by risk-averse investors or those wanting to diversify their portfolio.
    • Public Provident Fund (PPF)
      • PPF is a popular long-term saving and investment product because it offers tax savings, safety, and returns. 
      • In 1968, PPF was first offered to the public by the Finance Ministry’s National Savings Institute.
    • Senior Citizen’s Savings Scheme
      • The Senior Citizens Savings Scheme (SCSS) is aimed at providing regular income to senior citizens after they reach age 60.
    • Sukanya Samriddhi Yojana Scheme (SSYS)
      • The SSYS is a government-backed deposit scheme for a girl child. 
      • Launched as a part of the ‘Beti Bachao Beti Padhao’ campaign, this scheme helps meet the financial needs of a girl child and comes with income-tax benefits under section 80C.
    • Chit Fund
      • A chit fund is both a savings and credit product that has a predetermined value and is for a fixed period. 
      • A specific number of members contributes monthly until the end of the term.

    Source: TH