Govt permits banks to sell more small savings schemes

Govt permits banks to sell more small savings schemes
In order to encourage savings, the government has allowed banks, including the top three private sector lenders, to accept deposits under various small savings schemes like National Savings Certificate (NSC), recurring deposits and monthly income plan. Until now, most of the small savings schemes were sold through post offices.

According to a recent government notification, banks can also sell National Savings Time Deposit Scheme 1981, National Savings (Monthly Income Account) Scheme 1987, National Savings Recurring Deposit Scheme 1981 and NSC VIII issue.

As per the notification, all public sector banks and top three in the private sector -- ICICI Bank, HDFC Bank and Axis Bank -- to receive subscription from the expanded portfolios.

So far, these banks were allowed to receive subscription under Public Provident Fund, Kisan Vikas Patra 2014, Sukanya Samriddhi Account, Senior Citizen Savings Scheme-2004.

Increased outlets for selling small savings scheme would result in higher mobilisation under the scheme.

Last month, the government kept unchanged interest rates on small savings schemes for the October-December quarter.

Since April last year, interest rates on all small saving schemes have been recalibrated on a quarterly basis.

Investments in the Public Provident Fund (PPF) scheme will fetch annual rate of 7.8%, while Kisan Vikas Patra (KVP) investments will yield 7.5% and mature in 115 months.

The one for girl child savings, Sukanya Samriddhi Account Scheme will offer 8.3% annually. Similarly, the investment on five-year Senior Citizens Savings Scheme will yield 8.3%. The interest rate on the senior citizens scheme is paid quarterly.

On the basis of the decision of the government, interest rates for small savings schemes are to be notified on a quarterly basis since April 1, 2016, the ministry said, while notifying the rates for the third quarter of financial year 2017-18.
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