Govt 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 such as National Savings Certificate (NSC), recurring deposits and monthly income plans.

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.

According to the notification, all public sector banks and top three in the private sector — ICICI Bank, HDFC Bank and Axis Bank — can receive subscriptions from the expanded portfolios.

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

An increase in outlets for selling these schemes would result in higher mobilisation of small savings.

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 PPF scheme will fetch annual rate of 7.8 per cent while KVP investments will yield 7.5 per cent and mature in 115 months.

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

On the basis of the decision of the government, interest rates for these 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.