Savings scheme

PPF, Senior Savings Plan offering better returns than bank FDs? Know the details

Even though term deposits now yield a little more than before, since several banks have recently raised their interest rates, small savings plans still offer more attractive returns. The returns of small savings schemes, such as the PPF, the savings scheme for the elderly, the national savings certificate and the Sukanya Samriddhi account scheme, vary between 4% and 8.1%, depending on the scheme you have chosen and the duration of the investment.

What is a small savings plan?

Small savings schemes are savings instruments run by the government to encourage citizens to save regularly. Plans include post office savings deposits, 1-3 year term deposits and 5 year recurring deposits. These also include savings certificates such as National Savings Certificates and Kisan Vikas Patra.

It also includes Public Provident Fund, Sukanya Samriddhi Account and Senior Citizens Savings Scheme social security schemes. The monthly income account is also covered by the schemes.

Current interest rates on small savings plans

Recently, the government left interest rates on small savings instruments unchanged for the April to June quarter. Interest rates for small savings plans are reviewed quarterly. The revision is carried out in line with the evolution of benchmark government bonds of similar maturity. Here are the current rates on various small savings instruments.

Post office savings deposits offer an interest rate of 4 percent per annum. Term deposits with terms of 1 to 3 years currently offer 5.5% per annum. Five-year term deposits yield 6.7% per annum. Five-year recurring deposits can earn 5.8% interest per year.

National Savings Certificates and Kisan Vikas Patra offer annual interest rates of 6.8% and 6.9%, respectively.

The public provident fund, the Sukanya Samriddhi account and the savings scheme for the elderly generate annual returns of 7.1%, 7.6% and 7.4%, respectively.

The Sukanya Samriddhi account was launched in 2015 as part of the Beti Bachao Beti Padhao campaign for a girl. The account can be opened in the name of a girl under 10 years old. The scheme is eligible for the tax benefit under Section 80C of the Income Tax Act. The term of the deposit is 21 years from the date of opening the account and a maximum of Rs 1.5 lakh can be invested in one year.

The Monthly Income Account offers an interest rate of 6.6% per annum.

Interest rate on fixed deposits

HDFC Bank, Axis Bank and Kotak Mahindra Bank have recently increased their interest rates on fixed deposits of various tenors and the deposit amount.

For term deposits below Rs 2 crore, HDFC Bank now offers interest rates of between 5.1 and 5.6%, depending on the seniority and profile of the borrowers. Different interest rates are offered to different profiles like women, seniors, etc.

For deposits above Rs 2 crore, Axis Bank now offers interest rates between 4.45 and 4.65.

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