In order to encourage savings, Central Government has issued a notification allowing all public sector banks and top three private sector banks (ICICI Bank, HDFC Bank and Axis Bank) to accept deposits under various small savings schemes, which until now, were only sold through post offices.
Permission to sell more Small Savings Scheme:
According to this recent government notification, all public sector banks and top three private sector banks (ICICI Bank, HDFC Bank and Axis Bank) can now sell National Savings Time Deposit Scheme 1981, National Savings (Monthly Income Account) Scheme 1987, National Savings Recurring Deposit Scheme 1981 and National Savings Certificate – VIII issue.
- So far, banks were permitted to receive subscription only under Public Provident Fund, Kisan Vikas Patra-2014, Sukanya Samriddhi Account and Senior Citizen Savings Scheme-2004.
- This decision will increase the overall number of selling points of small savings scheme which would eventually result in higher mobilisation of funds under these schemes.
Interest Rates on Small Savings Scheme:
Since April 1, 2016, interest rates of all small saving schemes have been linked to government bond yields and are now notified on a quarterly basis.
- Last month, the government notified interest rates on small savings schemes for the October-December quarter. The interest rates have been kept unchanged as compared to July-October quarter.
- As per current interest rates, investments in the public provident fund (PPF) scheme will fetch 7.8 per cent return while Kisan Vikas Patra (KVP) investments will yield 7.5 per cent and mature in 115 months.
- Sukanya Samriddhi Account Scheme, the scheme related to girl child savings offers 8.3 per cent annually, whereas investment on 5-year Senior Citizens Savings Scheme will yield 8.3 per cent, with the interest being paid quarterly.