In News: Government has increased interest rate on various small savings schemes for the fourth quarter of the current Financial Year starting from 1st January, 2023.
About Small Saving Schemes/Instruments
Small Savings Schemes are a set of savings instruments managed by the central government with an aim to encourage citizens to save regularly irrespective of their age.
They are popular as they not only provide returns that are generally higher than bank fixed deposits but also come with a sovereign guarantee and tax benefits.
They are the major source of household savings in India and comprises 12 instruments.
The depositors get an assured interest on their money.
Collections from all small savings instruments are credited to the National Small Savings Fund (NSSF).
The rates on these small savings schemes are calculated on the yields on government securities (G-secs).
Small savings have emerged as a key source of financing the government deficit.
Small savings instruments can be classified as
Postal Deposits comprising savings account, recurring deposits, time deposits of varying maturities and monthly income scheme.
Savings Certificates: National Small Savings Certificate (NSC) and Kisan Vikas Patra (KVP).
Social Security Schemes: Sukanya Samriddhi Scheme, Public Provident Fund (PPF) and Senior Citizens‘ Savings Scheme (SCSS).
The Sukanya Samriddhi Account
It was launched in 2015 under the Beti Bachao Beti Padhao campaign
It is exclusively for a girl child.
The account can be opened in the name of a girl child below the age of 10 years.
The scheme guarantees a return of 7.6% per annum and is eligible for tax benefit under Section 80C of the Income Tax Act.
The tenure of the deposit is 21 years from the date of opening of the account and a maximum of Rs 1.5 lakh can be invested in a year.
