Government Permits Banks To Sell More Small Savings Schemes

In order to encourage savings, the government has allowed banks, including top three private sector lenders, to accept deposits under various small savings schemes like National Savings Certificate, 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.

All public sector banks and the top three private sector lenders – ICICI Bank, HDFC Bank and Axis Bank – can 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 scheme will fetch an annual rate of 7.8 percent while Kisan Vikas Patra investments will yield a rate of 7.5 percent and mature in 115 months. The one for girl child savings, Sukanya Samriddhi Account Scheme, will offer 8.3 percent annually. Similarly, the investment on 5-year Senior Citizens Savings Scheme will yield 8.3 percent. 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 third quarter of financial year 2017- 18.