Small Savings Schemes
Small savings schemes include PPF, Senior Citizens Savings Scheme, Post office deposit etc. They were initially created to mobilise saving by encouraging “small earners” to save. They offered abovemarket deposit rates in accessible locations like post offices for this purpose. Each of the small saving scheme is designed for different purpose. Some of them look to target specific target groups like girl child, working class, senior citizens etc. Though good for the targetted group, small savings schemes are presenting a problem to banks. Because small savings schemes offer high and fixed deposit rates (within year) and compete with banks, it is difficult for banks to reduce their own deposit rates and hence pass on policy rate cuts to consumers in form of lower lending rates.
Presently thirteen National Saving Schemes (NSS) viz Post Office Savings Accounts, Time Deposits (1 year, 2 year, 3 year and 5 years), Monthly Income Scheme, Post Office Recurring Deposit Scheme, National Savings Certificate (VIII Issue), Kisan Vikas Patra Scheme, Public Provident Fund Scheme, Sukanya Samriddhi Account Scheme and Senior Citizens Savings Schemes are under operation.
Various important small savings schemes details are given below:
Senior Citizen Savings Scheme
- There shall be only one deposit in the account in multiple of INR.1000/- maximum not exceeding INR 15 lakh.
- An individual of the Age of 60 years or more may open the account.
- An individual of the age of 55 years or more but less than 60 years who has retired on superannuation or under VRS can also open account subject to the condition that the account is opened within one month of receipt of retirement benefits and amount should not exceed the amount of retirement benefits.
- Maturity period is 5 years.