Small savings instruments are financial initiatives controlled by the central government. These schemes serve to inspire regular savings among individuals of all ages. They not only provide higher returns compared to fixed bank deposits, but also offer a sovereign guarantee and tax benefits.
Recent Development: For the first quarter of the financial year 2022-23, the government has decided to keep the interest rates of small savings schemes unchanged. This means that the post office small savings interest rates will remain the same from April 2022 to June 2022.
Preparing for the UPSC exam or any other competitive exams? Get acquainted with various government schemes launched for diverse objectives.
Preparing for the upcoming UPSC CSE? Check out the links below and kickstart your IAS exam preparation:
The government has chosen to keep the interest rates of small savings instruments unchanged for the quarter from April to June. The interest rates applicable from April 1, 2022, to June 30, 2022, are provided below.
Small savings instruments
Interest rates for Q1 of 2022-23
Public Provident Fund Account (PPF)
7.1 per cent
Senior Citizens Savings Scheme (SCSS)
7.40 per cent
Post Office Time Deposits
5.5-6.7 per cent
National Savings Certificate
6.8 per cent
Post Office Monthly Income Scheme(MIS)
6.6 per cent
Post Office 5-year time deposit
6.7 per cent
5-year recurring deposit
5.8 per cent
Sukanya Samriddhi Yojana
7.6 per cent
Savings Deposits
4 per cent per annum
Monthly Income Account
6.6 per cent
Noteworthy Small Savings Schemes
Post Office Savings Account
Similar to a bank savings account.
Only one account can be opened by an individual.
Minimum deposit amount: Rs. 500
Minimum withdrawal amount: Rs. 50
Maximum deposit: No limit
Kisan Vikas Patra (KVP)
Can be purchased from any post office.
The minimum deposit is Rs. 1000. There is no maximum limit.
The deposit matures on the period prescribed by the Ministry of Finance.
Certificates can be easily transferred.
Senior Citizen’s Savings Scheme
An individual above 60 years of age can open an account.
Retired Civilian Employees above 55 years of age and below 60 years can also invest within 1 month of receiving retirement benefits.
The maximum limit of investment per individual is Rs. 15 lakhs. The minimum deposit is Rs. 1000.
Public Provident Fund (PPF)
PPF is a long-term investment for a period of 15 years.
Minimum deposit Rs. 500 and the maximum deposit is Rs. 1.50 lakh in a financial year.
National Savings Certificate (NSC)
The NSC has a maturity period of 5 years.
The minimum deposit is Rs. 1000. There is no maximum limit.
Sukanya Samriddhi Scheme
Introduced for the benefit of the girl child.
The minimum deposit is Rs. 250 and the maximum deposit is Rs. 1.50 lakh in a financial year.
The investment matures after 21 years from the date of opening the account, or upon the girl child's marriage after she turns 18.
The account must be closed if the girl child becomes an NRI or loses her Indian citizenship.
These schemes are secure and time-tested investment avenues. While they do not provide quick returns, they are safer compared to market-linked schemes.
Small savings instruments are managed by the central government to encourage citizens to save regularly, irrespective of their age. They provide returns that are usually higher than bank fixed deposits and come with a sovereign guarantee and tax benefits.
What are some types of Small Savings Instruments?
The small savings instruments include Public Provident Fund Account (PPF), Sukanya Samriddhi Scheme, Senior Citizen Savings Scheme, Post Office Savings Account, 5-Year Post Office Recurring Deposit Account (RD), National Savings Certificates (NSC).
What are the latest interest rates of Small Savings Instruments?
The government has decided to maintain the status quo on interest rates of small savings instruments for the April-June quarter. The interest rates vary between 4% and 7.6% depending on the type of scheme.
What are some important Small Savings Schemes?
Some important Small Savings Schemes include Post Office Savings Account, Kisan Vikas Patra (KVP), Senior Citizen’s Savings Scheme, Public Provident Fund (PPF), National Savings Certificate (NSC), and Sukanya Samriddhi Scheme.