Saving Schemes

Savings Schemes in India are investment options offered by the government and public financial institutions. These schemes aim to encourage people to save and invest wisely, promoting good financial habits. They not only help individuals and families to build strong financial security but also boost the flow of money into the Indian economy.

Investing in government-backed savings schemes provides individuals with the opportunity to grow their money at comparatively higher interest rates. The purpose of this proactive strategy is to encourage people to invest in savings schemes, protecting them from the risk of devaluation because of inflation. By choosing savings schemes, you not only preserve your wealth but also ensure its growth.

Such small savings schemes also come with tax exemptions, helping investors with a way to reduce their tax obligations while growing their wealth. This double benefit of saving on taxes and building financial security makes these schemes an attractive choice for those aiming for both financial stability and efficiency.

List of Saving Schemes

Here is a list of the best savings schemes in India for your comparison and easy reference. Some of these are the best tax saving schemes available that are backed by the government ensuring maximum security. Compare the interest rates, tenure, and tax implications and choose the best saving plan to secure your financial future.

Different Types of Saving Schemes

Saving is the most integral aspect of building your personal finance and securing your future. Saving schemes, available from different banks and the government, offer structured ways to build funds and reach financial goals. There are various types of saving schemes to suit different needs of investors. Some of the best savings schemes in India include:

Post Office Saving Schemes

India Post, commonly known as the Post Office offers a range of savings schemes catering to the varied range of financial goals of the public including Post Office Savings Account, Post Office Monthly Income Scheme, etc. Check out the best Post Office savings schemes along with their vital details.

Post Office Savings Account

The Post Office Savings Account is a simple and accessible savings option provided by the Indian postal system. It is easy to make deposits or withdraw money at any post office branch. The ease of transactions makes it a convenient option for routine savings

As a government-backed savings option, Post Office savings accounts are secure , offering a safe place for individuals to keep their savings.

Post Office Monthly Income Scheme (POMIS)

The Post Office Monthly Income Scheme (POMIS) is a savings scheme in India that provides a regular and stable monthly income to investors. It's designed for people who want a steady income without taking too much risk. With POMIS, you invest a lump sum, and in return, you get fixed monthly interest payments.

The scheme lasts for 5 years, and it comes with a set interest rate. Even though it may not give the highest returns, it's a safe choice backed by the government. Many people prefer it because of its simplicity, reliability, and easy accessibility through the post office.

National Savings Time Deposit (TD)

The National Savings Time Deposit (TD) is a secure and flexible savings option offered by the Government of India. It provides attractive interest rates and a range of tenure options, catering to diverse financial goals and risk profiles. The scheme's guaranteed returns and low risk of capital loss make it suitable for individuals seeking stability and growth. With its accessibility and flexibility, the National Savings Time Deposit serves as an ideal choice for individuals seeking to secure their financial future.

National Savings Recurring Deposit (RD)

National Savings Recurring Deposit (RD) is a savings plan in India provided by the government. The scheme allows individuals to deposit a fixed amount every month, with a minimum deposit of Rs. 100 and no maximum limit. The interest earned on the accumulated amount is compounded annually, providing a steady growth of savings. The scheme's tenure ranges from 1 to 10 years, offering flexibility to match individual financial goals. With its guaranteed returns, low risk, and disciplined savings approach, the National Savings Recurring Deposit is a suitable option for individuals seeking to build a secure financial future.

Kisan Vikas Patra (KVP)

Kisan Vikas Patra (KVP) is a small savings scheme launched by the Indian government through the Department of Posts. It is a secure, investment option that offers a guaranteed return on maturity. It aims to yield double of the invested amount at the end of the 115th month. Although Kisan Vikas Patra scheme was originally launched for long-term savings by farmers, now it is accessible to everyone.

Government Saving Schemes

Government-backed savings schemes offer a secure and accessible way for individuals to save and grow their money. These schemes encourage people to participate and promote a culture of saving that contributes to both economic growth and social security. Explore the best government savings schemes below:

National Savings Certificate (NSC)

The National Savings Certificate (NSC) is a savings scheme is a fixed-term investment where individuals can invest a lump sum amount, and the invested sum, along with accumulated interest, is paid back at the end of the maturity period.

Public Provident Fund (PPF)

Public Provident Fund, commonly known as PPF, is a long-term investment scheme backed by the Government of India. It offers tax-free interest in deposits and maturity amount. You can deposit a minimum of Rs. 500 and a maximum of Rs. 1.5 lakh in a financial year. The current interest rate for PPF is 7.1%.

Employee Provident Fund

The Employee Provident Fund (EPF) is a mandatory savings scheme in India aimed at providing financial security to employees after their retirement. Both the employer and employee contribute a fixed percentage of the employee's salary (basic and dearness allowance) to the EPF account. The current contribution rate is 12%, of which 8% is contributed by the employer and 4% by the employee.

Voluntary Provident Fund (VPF)

The Voluntary Provident Fund (VPF) is an optional savings plan in India, allowing employees to contribute a higher portion of their salary towards their Provident Fund (PF) account. This voluntary contribution is beyond the mandatory 12% that is deducted for EPF. VPF provides an opportunity for individuals to raise their retirement corpus by increasing their savings.

This scheme, regulated by the Employees' Provident Fund Organization (EPFO), empowers employees to take greater control of their long-term financial planning by voluntarily enhancing their PF contributions.

Senior Citizens Savings Scheme (SCSS)

The Senior Citizens Savings Scheme (SCSS) in India is a savings plan specially made for people aged 60 and above (or 55 and above if they've retired). It's a safe way for older individuals to invest their money and earn a decent interest rate. This gives them a steady income after retirement. The Senior Citizens Savings Scheme offers a reliable and tax-friendly choice for senior citizens to protect their savings and have financial security during their retirement.

Government Savings Bond

A government savings bond is a debt security issued by a government to raise money from the public. It's ‌an IOU from the government, promising to pay you back your principal plus interest at a predetermined date.

A government savings bond is a low-risk investment where individuals lend money to the government and receive periodic interest payments, getting back the initial amount when the bond matures.

Different bonds have varying terms and interest rates. They help governments raise funds for projects and are considered a secure investment option.

Tax Saving FDs

A Tax Saving Fixed Deposit (FD) offers fixed returns and tax savings. It has a 5-year lock-in period, and premature withdrawals are not allowed. The major advantage is eligibility for deductions under Section 80C, allowing investors to reduce taxable income by the invested amount, up to Rs 1.5 lakh.

This promotes disciplined savings and serves as a strategic tool for tax planning. Tax Saving FDs are a reliable option for saving money and cutting down on income tax, making them popular for simple and effective financial management.

Top Banks and Small Finance Banks

Various public and private sector banks, along with small finance banks, provide different interest rates for tax-saving Fixed Deposits (FDs). To find the specific rates offered by leading financial institutions, refer to the FD rates listed below.

ELSS Mutual Fund

ELSS, or Equity Linked Savings Schemes, is a combination of tax-saving benefits with the potential for higher returns. While returns are market-dependent, ELSS can provide higher returns compared to traditional tax-saving options, with tax advantages under Section 80C. It has a three-year lock-in period and offers a dynamic option for wealth creation.

Women/Girl Child Saving Schemes

The Indian government has implemented various women/girl child saving schemes to promote their financial independence and well-being. These schemes offer a range of benefits, including tax benefits, interest subsidies, and scholarships. Here are some of the key women and girl child savings schemes:

Sukanya Samriddhi Yojana (SSY)

Sukanya Samriddhi Yojana (SSY) is a government-backed savings scheme in India aimed at securing the financial future of girl children. Parents or guardians can open an SSY account for their daughter before she turns 10. The scheme offers an attractive interest rate and comes with a tenure of 21 years or until the girl's marriage, whichever comes first.

With a focus on promoting girl child education and marriage expenses, SSY encourages long-term savings. The scheme provides tax benefits, making it a popular choice for parents seeking a dedicated and disciplined savings avenue for their daughters' future needs.

Mahila Samman Savings Certificate (MSSC)

The Mahila Samman Savings Certificate (MSSC) is a government-sponsored savings scheme specifically designed for women. Introduced in 2023, the scheme offers a fixed interest rate of 7.5% per annum compounded quarterly, making it an attractive investment option for women seeking to secure their financial future.

With a tenure of two years, the MSSC scheme accepts deposits ranging from Rs. 250 to Rs. 2 lakh, providing flexibility to suit individual financial goals. This gender-inclusive initiative aims to empower women by encouraging savings and promoting financial independence.

Boy Child Saving Schemes

There are various government-backed savings schemes that can save and accumulate wealth to secure future male children. Although, as of now, there is only one savings scheme that is launched especially for male children, named Ponmagan Podhuvaippu Nidhi Scheme, which is native to the state of Tamil Nadu.

The parents of male children can invest in popular savings schemes including the National Savings Certificate (NSC), Public Provident Fund (PPF), Post Office Monthly Income Scheme (POMIS), Post Office Recurring Deposit (PORD).

Ponmagan Podhuvaippu Nidhi Scheme

The Ponmagan Podhuvaippu Nidhi Scheme (PPNS) is a savings scheme offered by the Tamil Nadu government to encourage parents to save for the education of their male children. The scheme guarantees a competitive interest rate of 9.7% per annum, compounded annually. The minimum deposit amount is Rs. 100 per month, and there is no maximum limit. The tenure of the scheme is 15 years.

The PPNS is a good option for parents who are looking to save for the education of their male children. It offers a secure and efficient way to accumulate funds.

Importance of Investing in Savings Schemes

Investing in savings schemes in India is important for all individuals and families for many reasons. Savings schemes offer a variety of financial products that aim to encourage saving and provide a stable, means of wealth accumulation. Here are some key reasons highlighting the importance of investing in savings schemes in India:

• Financial Security and Stability: Savings schemes provide a secure way for individuals to accumulate wealth. They are typically designed to safeguard the principal amount while offering modest returns. This can be especially important for those who prioritize capital preservation.
• Goal Planning and Achieving Objectives: Savings schemes allow individuals to set financial goals and work towards achieving them. Whether it's saving for education, buying a home, or planning for retirement, these schemes provide a disciplined approach to saving and investing.
• Tax Benefits: Many savings schemes in India offer tax benefits, encouraging individuals to save and invest while reducing their tax liabilities. Popular examples include Public Provident Fund (PPF), Employees Provident Fund (EPF), and tax-saving fixed deposits.
• Diversification of Investments: Savings schemes often come in various forms, such as fixed deposits, recurring deposits, and provident funds. Investing in a mix of these schemes allows for diversification, spreading the risk across different assets and instruments.
• Encouraging Regular Savings Savings schemes often require regular contributions, encouraging a disciplined savings habit. Systematic investments can lead to the accumulation of a significant corpus over the long term.
• Accessibility and Ease of Use: Many savings schemes are easily accessible and have simple procedures for investment. This makes them suitable for a wide range of investors, including those who may not be well-versed in complex financial instruments.
• Government Support and Backing: Some savings schemes, such as the PPF and National Savings Certificate (NSC), are backed by the government. This provides a level of security and trust for investors, knowing that their investments are supported by the government.
• Retirement Planning: Savings schemes play a crucial role in retirement planning. Schemes like the Employees Provident Fund (EPF) and the National Pension System (NPS) help individuals build a retirement corpus, ensuring financial security during their retirement years.
• Inflation Hedge: While the returns on savings schemes may not always outpace inflation significantly, they can still provide a hedge against inflation. It's a conservative way to protect the purchasing power of money.
• Social Security Nets: Some savings schemes, like the EPF and various insurance plans, provide social security by offering financial support during emergencies, health crises, or unforeseen events.

In conclusion, investing in savings schemes in India is important for building a secure financial future, achieving financial goals, and ensuring stability during various life stages. It's essential for individuals to assess their financial objectives, risk tolerance, and time horizon to choose the most suitable savings schemes for their needs: