• Home
  • Saving Schemes
  • About Saving Schemes

About Saving Schemes

When speaking of a life well lived, financial independence, as exhibited by money conscious living and good saving habits, is one of the fundamental expectations. We all want to save some monies for a rainy day and feel comfortable in the knowledge that no unforeseen financial contingency can deviate us from our chosen way of life. Modern banking is a big supporter of saving schemes and encourages patrons to open clever investment instruments that are intended to ‘horde’ sums of money for a specified duration, earn periodic interest and offer said investors the peace of mind through the unfailing realization that such ‘parked’ monies are working 24x7 for them, aggressively growing and completely protected.

Types of Saving Schemes in India
  • National Saving Certificate

    Consistently, two of the most well followed and popular saving schemes in India, NSC and NSS offer great security alongside robust reliability in terms of returns. The primary features and benefits of these schemes are as follows-

    Features of National Saving Certificate

    • No maximum limit for investment with 0% tax deduction at source.
    • Impressive interest rate at 8.50% (NSC-VIII issue) and 8.80% (NSC-IX issue).
    • Tax savings per 80C of Income Tax Act for investments in excess of Rs.1,00,000 per annum.
    • Very attractive returns, a nominal investment of Rs.100 will yield Rs.234.35 in 10 years.
    • These certificates can be transferred from person to another once through the lifetime of the certificate.
    • The tenure of an NSC portfolio is 5 and 10 years for the NSC VIII Issue and NSC IX Issue respectively.
    • The interest accumulated annually is reinvested in line with the provisions of Section 80C of IT Act. Interest compounded on a half-yearly basis.
    • Can be used as collateral when applying for a bank loan.
  • Public Provident Fund

    A potent financial instrument that is tuned at savings in general and tax savings in particular, the PPF concept was floated by the National Savings Institute, Finance Ministry of India, in 1968. The PPF scheme offers a plethora of features and benefits that make it a popular option in its class.

    Features of Public Provident Fund

    • Interest rate of 8.70% p.a is compounded annually.
    • Minimum yearly investment of just Rs.500 to a maximum of Rs.1,50,000.
    • The maturity period of a PPF account is 15 years. However, this can be extended for upto 5 additional years.
    • A maximum of 12 deposits can be made in a financial year. Lump sum payments are also an option.
    • Joint accounts aren’t possible, plus, PPF accounts cannot be closed before the maturity period.
    • PPF accounts can be moved from one bank/post-office to another.
    • Accumulated interest is completely tax free.
    • PPF accounts save tax under Sec. 80C of the IT Act.
    • Applicant can avail loan with the PPF account as collateral from the 3rd financial year.
  • Senior Citizen Saving Scheme

    This saving scheme option is exclusive to senior citizens in India. Ideally, the applicant must be 60 years or more but those between the ages of 55-60 years, are retired or have opted for VRS, can also apply, provided that the account is opened within one month of the receipt of their retirement benefits. The salient features of SCSS are as follows-

    Features of Senior Citizen Saving Scheme

    • Interest rate of 9.3% p.a, payable on any of the following dates in an year- 31st March, 30th June, 30th Sept and 31st December.
    • The tenure of a SCSS portfolio is 5 years.
    • The applicant can make only one deposit into the account. This amount should be in multiples of Rs.1,000 and must not exceed a maximum of Rs.15 lakhs.
    • The account can be transferred from one post office/bank to another.
    • The SCSS account can be closed prematurely, provided the applicant shells out 1.5% of the deposit amount in the first year and 1.0% of the deposit amount in the second year.
    • Post the maturity of the account, the tenure can be extended for a further 3 years. After completing 1 year of this extension period, the account can be prematurely closed without any deductions.
    • TDS is deducted at source on the accumulated interest if the latter exceeds Rs.10,000 p.a.
    • SCSS accounts save tax as per the Section 80C of the Income Tax Act, 1961.
  • Kisan Vikas Patra

    First launched in 1988, the Kisan Vikas Patra (KVP) is one of the premier and popular saving scheme offering from the Indian Postal Department. This product has had a very chequered history- initially successful, deemed a product that could be misused and thus terminated in 2011, followed by a triumphant return to prominence and popular consumption in 2014. The salient features of KVP are as follows-

    Features of Kisan Vikas Patra

    • The grand USP- Money invested by the applicant doubles in 100 months (8 years, 4 months).
    • KVPs are available in the following denominations- Rs.1000, Rs.5000, Rs.10,000 and Rs.50,000.
    • The minimum purchase value for the KVP is Rs.1000. There is no maximum limit.
    • KVPs are available at all departmental post offices across India.
    • These certificates can be prematurely encashed after 2 ½ years from the point of issue.
    • KVPs can be transferred from one individual to another and from one post office to another.
  • Employee Provident Fund

    Administered by the Employees' Provident Fund Organisation (EPFO), the Employee Provident Fund (EPF) targets Indian workers through a system of compulsory monetary contribution into a specified ‘provident fund’ account that will act at a later date as their retirement fund, or could also be treated as emergency funds for unforeseen or planned financial requirements.

    In essence, the employer and employee each contribute 12% of the latter’s salary amount into this provident fund account on a monthly basis. EPF is one of the shining success stories when it comes to government sponsored saving schemes in India with massive popularity and vast implementation.

    The interest rate applicable on the amount accumulated in the EPF account is decided by the government and has traditionally ranged between 8-12% of the funds maintained in the account. The interest is credited to the concerned account on the 1st April each year. The EPFO office sends annual reports through the employer that the concerned employee can use to get clear bearings on the amount accumulated in his/her account. Also, EPF related information can be sourced from the EPFO’s official website.


Ask Your Loan Advisor !