Small Saving Schemes

Small savings schemes are provide safe and attractive investment 

options to the public.At the same time,It also mobilize resources for developmental purposes. These schemes are promoted mainly by the National Savings Organization (NSO).Apart from this, it has large network of over 5 lakh small savings agents working under different categories, like the Standardized Agency System (SAS),

Mahila Pradhan Kshetriya Bachat Yojana (MPKBY), 

Public Provident Fund Agency Scheme, 

Payroll Savings Groups, and 

School Savings 

Banks (Sanchayikas), also participate in promoting these schemes. The 

Postmasters  are responsible in mobilizing savings, especially in rural and remote areas. The small savings schemes presently in operation have significant relevance,especially for farmers, self-employed people, salaried people, and other fixed income investors, like retired persons. 

Features of Small Savings Schemes: 

The salient features are common to the various small savings schemes: 

Government-backed Schemes: All these small savings schemes are operated either directly by the government or by a government organization like the post offices or nationalized banks, and are, therefore, very safe. The government, after all, can always be expected to honor its commitments. Fairly streamlined procedures are in place for making deposits and withdrawals of money, whether upon maturity or earlier. With these saving 

schemes, individuals can rest assured about the safety of their investment, timely payment of interest and repayment at maturity. 

Suitable for Small Investors: As the minimum investment limits in some schemes range from Rs.50 to Rs.500, even a person with very low monthly savings can participate and thereby save and earn additional income. An added advantage is the fact that since most of these schemes are operated through post offices and nationalized banks, they are easily accessible to the small investors across the country. 

Attractive Interest Rates: Returns on some schemes like Indira Vikas Patra,Kisan Vikas Patra, etc., are somewhat higher than the interest on bank deposits or dividend yield on units. Some schemes even offer a totally tax-free income, like the PPF (8%), and Post Office Savings (Deposit) (3.5%), etc.

Liquidity: Most of these schemes have a provision for premature withdrawal, which increases the liquidity of your investment. Further, some banks extend loans against the security of these saving certificates.

Duration: These schemes offer a wide choice in so far as the duration is concerned,varying from one year to 15 years. It is easy, therefore, to find a saving scheme, which meets your requirements in terms of time frame.

Tax Benefits: All small savings schemes are entitled to some tax benefits or the other,like income tax, wealth tax, etc. The actual quantum of benefit varies from scheme to scheme and limited to a few, on account of the changes introduced by the Finance Act 2005. These schemes are often advantageous to those in high tax brackets as they offervarious tax benefits