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As they say, savings are the most important thing in one should do during his youth so that he can spend his/her golden period of life in peace and can feel empowered. Though it’s true, most of us don’t know that if we save smartly, we can not only make a huge amount but also gain interest from it.

You can say a person can make his/her savings grow. There are several saving Schemes are launched by the Government of India or public sector financial institutions or banks.

saving schemes in India

Though the schemes vary according to interest rate, investment horizons and tax treatments but each of them are equally beneficial if you wish your saved money to grow. If we talk straightforwardly, saving schemes prepare you financially for the unforeseen personal and medical emergencies. Also, it helps a person meet his/her personal aspirations and that of his/her family’s like - additional educational course to supplement your existing qualifications, a child’s higher education and marriage, etc.

It makes absolute sense if saving schemes also serve as an additional source of income. Also, it instills a disciplined habit for regular savings. Further, they are low on risk, but at the same time, provide good returns. The interest rates on savings schemes are usually revised every 3-6 months.

“Saving as a youth empowers golden period of life”

Types of saving schemes in India can be broadly categorized into 2 types based on their popularity, financial security and returns

National Savings Certificate (NSC)

The National Savings Certificate is a scheme offered for fixed income investment that can be opened with any post office by the Government of India. It involves a savings bond that proves to be tax-efficient for the investor. It is best suited for mediocre investors with low-risk appetite.

The National Savings Certificate is similar to other fixed-income investments like PPF (Public Provident Fund) and Post Office Fixed Deposits. Moreover, it is important to understand that being a safe and low-risk investment also implies that it does not ensure high returns, especially when the capital market is volatile.

One can purchase an NSC by his/her name or hold a joint account with another adult or buy it for a minor. The government makes this scheme available only to Indian national individuals. Therefore, HUFs (Hindu Undivided Families) and NRIs (Non-Resident Indians) are not eligible to invest in NSCs.

Attractions of the National Savings (NSC) Certificate

  • Based on a maturity period of five years and ten years, the schemes are of two types
  • Although NSCs do not have any maximum limits of purchase investments of only up to Rs 1.5 lakh attracts tax benefits under Section 80(c) of the Income Tax Act, 1961.
  • A calculation of 7.6 percent per annum is the current rate of interest applicable to NSCs. This interest rate is added to the investment and then compounded annually and serves as a stable source of regular income
  • A small investment such as Rs 100 is enough to get the scheme started and increase the amount as per convenience
  • Acceptable as collateral by banks and financial institutions as well as security for secured loans
  • Acts as financial security and support for the nominee on the unforeseen demise of the investor
  • When the investment completes its maturity tenure, then only the entire maturity value is payable. Also, NSC is not completely tax-free, since TDS on NSC pay-outs is applicable.
  • Until and unless exceptional circumstances like the sudden death of the investor or legal order from the court takes place, investors are not eligible for premature withdrawal

National Savings Scheme (NSS)

Backed by the government of India National Savings Scheme (NSS) offers the entire sum assured after the completion of its maturity tenure. The applicable rate of interest is compounded annually. As per the investment objectives, NSS also gives the flexibility to extend the term. Additionally, it is also tax deductible under Section 80(c) of the Income Tax Act, 1961.

Attractions of the National Savings Scheme(NSS)

  • Once the NSS completes the maturity term, it offers fixed assured returns. However, they are not market-linked like some other government schemes
  • The rates on small saving schemes are revised and updated quarterly. This implies that the investor will be eligible for higher interest rates
  • NSS schemes like PPF, Sukanya Samriddhi Yojana, NSC, etc., attract tax exemptions of up to Rs 1.5 lakh under Section 80(c) of Income Tax Act, 1961. Besides, interest on Sukanya Samriddhi Yojana and PPF and Sukanya Samriddhi Yojana is also tax-free
  • Investors are not eligible for premature withdrawal unless under exceptional circumstances like the sudden death of the investor

Public Provident Fund (PPF)

Under the Finance Ministry of India, Public Provident (PPF) was introduced by National Savings Institute in the year 1968. It is an effective savings instrument for tax savings.

Attractions of the Public Provident Fund Savings Scheme(PPF)

  • Offers an interest rate of 7.6 percent per year. Which is compounded annually afterward
  • Applicable on a minimum annual investment of Rs 500 and a maximum of Rs 1,50,000
  • Payable through a maximum of 12 deposits in one financial year or in an in lump sum too
  • As per the discretion of the investor, the maturity period varies from a minimum tenure of 15 years and can be extended up to a maximum of 5 more years.
  • Offers further flexibility as it can be moved from one post office or bank to another
  • Not applicable on joint accounts
  • Investors are eligible for tax deductions under Section 80(c) of the Income Tax Act, 1961
  • The accumulated savings are accepted by banks and financial institutions as security and collateral during loan application from the third financial year

Post Office Savings Scheme

Post office saving scheme is the most suitable for investors who have a low-risk appetite as it is said to be one of the most secure and reliable saving schemes in India. Along with assuring investors of high returns, the process is streamlined, quick and hassle-free. It comes along with the inherent features of high-end investment and saving schemes in India.

The following are the products of Post Office Savings Scheme-

  • Post Office Savings Account
  • 5 Years Post Office Recurring Deposit Account
  • Post Office Time Deposit Account
  • Post Office Monthly Income Account Scheme
  • Senior Citizens Saving Scheme
  • 15 Years Public Provident Fund Account
  • National Savings Certificates (NSC)- 5 Years NSC (VIII Issue) and 10 Years NSC (IX Issue)
  • Kisan Vikas Patra (KVP)
  • Sukanya Samriddhi Account
  • Employee Provident Fund (EPF)
  • National Pension System (NPS)
  • Voluntary Provident Fund (VPF)
  • Deposit scheme for retiring government employees
  • Pradhan Mantri Jan Dhan Yojana

Senior Citizens’ Savings Scheme (SCSS)

Keeping in mind the unique needs of senior citizens in India, that is, individuals of at least 60 years of age, Senior Citizens Savings Scheme was planned especially. Moreover, individuals between 55 years and 60 years who have retired or have opted for Voluntary Retirement Scheme (VRS) are also eligible to apply for Senior Citizens Savings Scheme, but only when the savings scheme account has been issued within one month of the receipt of their retirement benefits.

Attractions of Senior Citizens’ Savings Scheme (SCSS)

  • Payable on any one of these days in a financial year - 31st March, 30th June, 30th Sept, and 31st. December, the applicable rate of interest for Senior Citizens Savings Scheme is 8.3 percent
  • 5 year is the tenure of the saving schemes.
  • Investors are eligible for making a maximum of one deposit into the saving schemes and in multiples of Rs 1,000.
  • The maximum amount cannot be more than Rs 15 lakh.
  • The account is transferable from one bank or post office to another.
  • Provided the investor pays 1.5% of the deposit amount in the first year and 1.0% of the amount in the second year, the savings scheme account can be closed before the completion of its full tenure.
  • After the minimum maturity term of 5 years, as per the discretion of the investor, the tenure can be further extended to a maximum of 3 years. If the investor wants to withdraw the amount after the completion of 1 year of this extended term, the savings scheme account can be closed prematurely without any deductions.
  • The accumulated interest attracts TDS, deducted at source if the interest exceeds Rs 10,000 annually.
  • The accounts of this savings scheme enable investors to avail tax deductions under Section 80(c) of the IncomeTax Act, 1961.

Kisan Vikas Patra (KVP)

Launched in the year 1988, Kisan Vikas Patra (KVP) is one of the most preferred saving schemes from the Indian Postal Department. This savings scheme was discontinued in 2011 because of it being misused. However, it was re-introduced in 2014 after experiencing high demand.

Attractions of the Kisan Vikas Patra Savings Scheme (KVP)

  • The principal amount doubles in 118months (9 years & 10 months) at an interest rate of 7.3 percent
  • The feature is available only in multiples of Rs 1,000, Rs 5,000, Rs 10,000 and Rs 50,000, Rs 1,000 being the minimum purchase value. It does not have a maximum limit
  • It can be encashed prematurely after two and a half years from the issuance date.
  • The account of this savings scheme can be transferred from one bank or post office to another, also from one individual to another

Sukanya Samriddhi Yojana (SSY)

Launched by the Prime Minister Narendra Modi Introduced by the Indian Ministry of Finance to financially secure the future of the girl child and support her future ambitions, the Sukanya Samriddhi Yojana (SSY) savings scheme was introduced.

 Attractions of the Sukanya Samriddhi Yojana Savings Scheme(SSY):

  • Offers an annual rate of interest of 8.1 percent on the principal amount. It is one of the highest in saving schemes of its kind.
  • For this savings scheme, the account can be opened at any post office or authorized bank in India.
  • Deposits can be made in denominations of Rs 100. However, the initial deposit applicable ranges from a minimum of INR 1,000 to a maximum of Rs 1,50,000 per year.
  • From the issuance date, the maturity term is 21 years and the account holder has to pay into the account for a total term of 14 years.
  • This savings scheme account can be transferred from one bank or post office to another bank or post office anywhere within India.

Atal Pension Yojana

The Pension Yojana is named after former Prime Minister of India, Shri Atal Bihari Vajpayee. This savings scheme is designed to support the welfare of the weaker sections of the society. It is also applicable to individuals, those working in the unorganized sectors, who require financial support from a government-sponsored welfare program. Applicants pay a very low premium and enjoy the fruits of a robust and reliable pension plan.

Attractions of the Atal Pension Yojana Savings Scheme:

  • Atal Pension Yojana is a vigorous retirement plan that acts as a steady source of income for the weaker sections of the society and people working in the unorganized sector, which does not offer a pension option.
  • Indian citizens between the age groups of 18 years and 40 years are eligible to apply for the scheme.
  • Atal Pension Yojana involves a very low premium amount, but it has to be paid for a minimum duration of 20 years. Additionally, the higher the premium amount, the higher will be payable pension amount.
  • Under the scheme, it is mandatory for the applicant to hold an active savings bank account.
  • The applicant cannot be a policyholder of any other statutory saving schemes

Employee Provident Fund (EPF)

Introduced by the Employees' Provident Fund Organisation (EPFO), the Employee Provident Fund (EPF) involves the working Indian population to make a compulsory financial contribution into a Provident Fund (PF) account. However, it also offers them the benefit of financial security during unforeseen emergencies as well as planned financial objectives. EPF is one of the most popular and much-favored government-sponsored savings schemes of a vast majority of the Indian population working in the organized sector.

Features and benefits of the Employee Provident Fund (EPF) Savings Scheme

  • Under the Employee Provident Fund (EPF), the employer and employee contribute 12 percent of the employee’s monthly salary into this provident fund account every month
  • On the funds accumulated in the EPF account throughout the year, the annual rate of interest is decided by the government and usually ranges between 8 percent and 12 percent.
  • The interest is credited to the employee’s account on 1st April of every financial year
  • The EPFO office generates annual reports through the concerned employer that the employee is employed with, to enable him/her to clear the bearings on the amount accumulated in the EPF account

National Pension System (NPS)

Focusing on serving as a reliable and secure source of monthly income after retirement, the National Pension System is a savings scheme. To avail the benefits of the scheme, employees have to make a small premium payment towards NPS while they are gainfully employed. Accumulated throughout the tenure of the scheme, the lump sum amount is broken down through an annuity plan and paid to the applicant every month post-retirement.

Attractions of the National Pension System (NPS) Savings Scheme

  • The saving scheme acts as a secure source of monthly income for retired employees of state and central government organizations, employees of MNCs, and Indian citizens employed in the unorganized sectors
  • For employees of the government organizations, whether state or central,  the applicable deduction from the individual’s monthly income is 10 percent and an equal contribution from the government
  • NPS is similar to any other long-term saving schemes that benefit applicants after the completion of the pre-determined tenure, as per the terms of the scheme, for employees of MNCs or those from the unorganized sectors

As the name of this savings scheme itself suggests, employed Indian citizens can opt for out of their individual willingness.

Attractions of the Voluntary Provident Fund (VPF) Savings Scheme

  • The applicant willingly contributes up to 100 percent of their basic salary and dearness allowance
  • The contribution is towards their respective Employee Provident Fund (EPF), as opposed to the usual 12 percent
  • The applicants were eligible for an interest rate of 8.75% on the accumulated funds, as per the financial year 2013 – 14.
  • Any activity in an applicant’s VPF will have a direct impact on his/her EPF account too, and vice versa.

Deposit scheme for retiring government employees

The deposit scheme for retiring government employees, this savings scheme, is particularly well-known for its hassle-free application and documentation procedure along with great benefits.

Attractions of a deposit scheme for retiring government employees savings scheme

  • The documentation for the saving scheme is locally payable cheque, DD, etc., along with a certificate from the employer
  • Payable from the date of deposit to 30th June or 31st December of the same year, the interest is accrued. Also, it is subsequently followed by half-yearly payments on 30th June or 31st December
  • Withdrawals from the saving scheme cannot be made by applicants during the first year of the opening of the account. However, the applicant will be eligible for withdrawals after the completion of one year

Pradhan Mantri Jan Dhan Yojana

Launched in the year 2014, Pradhan Mantri Jan Dhan Yojana savings scheme is specially designed especially for those Indian citizens who do not have a bank account in India. The scheme offers benefits like cost-effective solutions related to accessing financial services like banking, remittance, insurance, pension, etc.

Attractions of Pradhan Mantri Jan Dhan Yojana Savings Scheme

  • The account holders under the scheme are eligible for an accidental insurance cover of Rs one lakh and a life cover of Rs 30,000, payable on the death of the beneficiary.
  • Under the scheme, the account holders are eligible for an overdraft facility of up to Rs 5,000, applicable to not more than one account per household.
  • Maintenance of a minimum balance in the account is not mandatory under the scheme.
  • Account holders of the Pradhan Mantri Jan Dhan Yojana can avail interest on their deposits.
  • Account holders of the scheme can avail seamless access to insurance policies and pension.
  • Beneficiaries of government schemes are eligible for Direct Benefit Transfer.
  • Mobile banking facility further makes this saving schemes user-friendly.

In a nutshell

If we talk about the benefits of saving schemes in India, it has never-ending pointers in the list. The most important thing is the public and private sector banking schemes from the Government of India offers a robust and secure savings instrument for individuals with varied financial objectives. Also, these saving schemes are customized to offer streamlined and seamless application and maintenance.

To make savings more attractive, the government offers a wide range of saving schemes to cater to the varied needs and financial goals of Indians citizens across different sections of society. For instance, Sukanya Samriddhi Yojana focuses on the financial support for the girl child, while Pradhan Matri Jan Dhan Yojana is specially designed for citizens below the poverty line. The last but not the least, the saving schemes are safe investment instruments that enable applicants to meet long-term financial goals like a child’s higher education, child’s marriage, retirement plan, etc.

Naval Goel is the founder of He is an Associate Member of the Indian Institute of Insurance`, Pune. He has been authorized by IRDA to act as a Principal Officer of Insurance Web Aggregator.
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