SMALL SAVINGS SCHEMES OF THE

GOVERNMENT OF INDIA
INTRODUCTION
Post Office Savings Bank-included in the Union List vide item No. 39 of Seventh
Schedule
of the Constitution of India.
Various Schemes framed by the Central Government under :
· Government Savings Bank Act, 1873,
· Government Savings Certificates Act, 1959,
· Public Provident Fund Act, 1968.
Two non-statutory schemes- introduced through executive orders.
OBJECTIVE :
Small savings schemes are designed to provide safe & attractive investment options to
the public and at the same time to mobilise resources for development.
OPERATING AGENCIES :
These schemes are operated through about 1.54 Lakh post offices throughout the
country.
Public Provident Fund Scheme is also operated through about 8000 branches of public
sector banks in addition to the post offices.
Deposit Schemes for Retiring Employees are operated through selected branches of
public sector banks only.
PROMOTION :
National Savings Organisation (NSO) is responsible for national level promotion of
these schemes through publicity campaigns and advertisements in audio, video as well as
print media.
Through a large network of over 5 lakh small savings agents working under different
categories viz:
· Standardised Agency System (SAS),
· Mahila Pradhan Kshetriya Bachat Yojana (MPKBY),
· Public Provident Fund Agency Scheme,
· Payroll Savings Groups,
· School Savings Banks (Sanchayikas)
In addition, the Extra Departmental Branch Postmasters (EDBPMs) also help in
mobilising savings, especially in rural and remote / far flung areas.
INSTITUTIONAL INVESTMENT IN SMALL SAVINGS SCHEMES :
These schemes being primarily meant for small urban and rural investors; institutions
are not eligible to invest in major small savings schemes.

N.R.Is’ INVESTMENT IN SMALL SAVINGS SCHEMES :

The Non-Resident Indians (NRIs.) are not eligible to invest in small savings schemes
including Public Provident Fund (PPF) and Deposit Schemes For Retiring Employees.2
CURRENT SMALL SAVINGS SCHEMES with MAIN
FEATURES:
POST OFFICE SAVINGS ACCOUNTS :
Who can open :
· A single adult or two-three adults jointly,
· A pensioner to receive/credit his monthly pension,
· Group Accounts by Provident Fund, Superannuation Fund or Gratuity Fund,
· Public Account by a local authority/body,
· An employee, contractor, or agent of a government or of a government company or of
a university for depositing security amounts,
· A Gazetted Officer or an officer of a government company or corporation or Reserve
Bank of India or of a local authority in his official capacity.
· A cooperative society or a cooperative bank for payment of pay, leave salary, pension
contribution of government servants on deputation with such society or bank.
Where can be opened :
· At any post office.
Deposits:
· Account can be opened with a minimum of Rs. 20.
· Maximum of Rupees One Lakh for single holder and Rs. Two lakhs for joint
holders. If depositors have more than one account (single, pension or joint), the
balances or shares of balances in all such accounts taken together should not exceed
Rs. One Lakh for each of the depositors.
Maturity period / withdrawal :
· There is no lock-in / maturity period prescribed.
· Withdrawals: Any amount subject to keeping a minimum balance of Rs. 50 in simple
and Rs. 500 for cheque facility accounts.
Interest :
· Interest at the rate (s) ‘as decided by the Central Government from time to time’, is
calculated on monthly balances and credited annually.
· Interest rate applicable w.e.f. 1.3.2001 is 3.5 per cent / per annum for general
public.
Pass Book :
· Depositor is provided with a pass book with entries of all transactions duly stamped by
the post Office.
Silent Accounts :
· An account, not operated during three complete years, shall be treated as ‘Silent
Account’.
· A service charge @ Rs. 20 per year is charged on the last day of each year until it is
reactivated.
· In a silent account from which after deduction of service charge, the balance becomes
NIL, the account stands automatically closed.
Final closure / withdrawal :
· Final withdrawal/ closure of account shall be allowed by Sub Postmaster/Extra
departmental Sub/Branch Postmaster on obtaining sanction from Head Postmaster.3
Tax treatment :
Income tax relief is available on the amount of interest under the provisions of section
80L of Income Tax Act.
*******************
POST OFFICE TIME DEPOSIT ACCOUNTS :
Types of Accounts:
· 1 Year maturity,
· 2 Years maturity,
· 3 Years maturity &
· 5 Years maturity.
Who can open :
· A single adult or two adults jointly,
· A pensioner to receive/credit his monthly pension,
· Group Accounts by Provident Fund, Superannuation Fund or Gratuity Fund, Authority
controlling funds of the Sanchayika.
· Public Account by a local authority/body,
· Institutional Accounts by the Treasurer of Charitable Endowments for India, Trust
Regimental Fund & Welfare Fund,
· A cooperative society / cooperative bank or scheduled bank on behalf of its members,
clients or employees
· Gazetted Officer in his official capacity.
Where can be opened :
· At any post office.
Deposits:
· A deposit with a minimum of Rs. 200 with no maximum limit.
Maturity period / withdrawal :
· Withdrawals: The deposited amount is repayable after expiry of the period for
which it is made viz: 1 year, 2 years, 3 years or 5 years.
Interest :
· Interest, ‘calculated on quarterly compounding basis’, is payable annually.
· Interest rates applicable w.e.f. the 1st
day of March, 2003 are :
Period of deposit Rate of Interest per cent
/ per annum
1 YEAR 6.25
2 YEARS 6.50
3 YEARS 7.25
5 YEARS 7.50
Pass Book :
o Depositor is provided with a pass book with entries of the deposited amount
and other particulars duly stamped by the post office.4
Tax treatment :
· Income tax relief is available on the amount of interest under the provisions of section
80L of Income Tax Act.
Premature withdrawal :
o Premature withdrawals from all types of Post Office Time Deposit accounts
are permissible after expiry of 6 months with certain conditions.
Post maturity interest :
· Post maturity interest “at the rate applicable to the post office savings accounts from
time to time”, is payable for a maximum period of 2 years.
*******************
ÿ POST OFFICE RECURRING DEPOSIT ACCOUNTS :
Who can open :
o A single adult or two adults jointly,
o A guardian on behalf of a minor or a person of unsound mind; or
o A minor who has attained the age of ten year, in his own name.
Where can be opened :
o At any post office.
Maturity :
o Period of maturity of an account is five years.
Deposits:
o Sixty equal monthly deposits shall be made in an account in multiples of Rs.
five subject to a minimum of ten rupees.
Defaults in deposits :
o Accounts with not more than four defaults in deposits can be regularized
within a period of two months on payment of a default fee.
o Account becomes discontinued after more than four defaults.
ß Interest & Repayment on maturity :
o On maturity of the accounts opened on or after 1st
March, 2003, an amount
(inclusive of interest) of Rs. 728.90 is payable to a subscriber of
Rupees: Ten denomination account.
o Amount repayable, inclusive of interest, on an account of any other
denomination shall be proportionate to the amount specified above.
ß Pass Book :
o Depositor is provided with a pass book with entries of the deposited amount
and other particulars duly stamped by the post Office.5
Premature closure :
o Premature closure of accounts is permissible after expiry of three
years provided that interest at the rate applicable to post office savings
account shall be payable on such premature closure of account.
Continuation after maturity :
· Permissible for a maximum period of five years.
*******************
POST OFFICE MONTHLY INCOME ACCOUNTS:
Who can open :
o A single adult or 2-3 adults jointly.
o More than one account can be opened subject to maximum deposit limits.
Where can be opened :
o At any post office.
Maturity :
o Period of maturity of an account is six years.
Deposits:
o Only one deposit shall be made in an account.
Deposit limits :
o Minimum: rupees one thousand.
o Maximum: rupees three lakhs in case of single and rupees six lakhs in
case of joint account. Deposits in all accounts taken together shall not
exceed Rs. three lakhs in single account and Rs. six lakhs in joint account.
The depositor’s shares in the balances of joint accounts shall be taken as
one half or one third of such balance according as the account is held by 2
or 3 adults.
Interest :
o Interest @ 8 per cent/ per annum, payable monthly in respect of the
accounts opened on or after the 1st
March, 2003.
o In addition, bonus equal to ten per cent of the deposited amount is
payable at the time of repayment on maturity.
Pass Book :
o Depositor is provided with a pass book with entries of the deposited amount
and other particulars duly stamped by the post Office.
Premature cloasure :
o Premature closure facility is available after one year subject to condition.
Closure of account :
· Account shall be closed after expiry of 6 years, bonus equal to ten per cent of
deposits shall be paid alongwith principle amount.6
Income Tax relief :
· Income tax relief is available on the interest earned as per limits fixed vide section 80L
of Income Tax, as amended from time to time.
*******************
NATIONAL SAVINGS CERTIFICATE (VIII Issue):
Who can purchase :
o An adult in his own name or on behalf of a minor,
o A minor,
o A trust,
o Two adults jointly,
o Hindu Undivided Family.
Where available :
o Available for purchase/issue at Post Offices.
Maturity :
o Period of maturity of a certificate is six Years.
Nomination / Transferability:
o Nomination facility is available.
o Certificates can be transferred from one post office to any other post office.
o Transfer from one person to another person permissible in certain
conditions.
Denomination / Deposit limits :
o Certificates are available in denominations (face value) of Rs. 100, Rs.
500, Rs. 1000, Rs. 5000 & Rs. 10,000.
o There is no maximum limit for purchase of the certificates.
Interest/maturity value :
o With effect from 1st
March, 2003, Maturity value a certificate of Rs. 100
denomination is Rs. 160.10.
o Maturity value of a certificate of any other denomination shall be at
proportionate rate.
o Interest accrued on the certificates every year is liable to income tax but
deemed to have been reinvested.
Premature encashment :
o Premature encashment of the certificate is not permissible except at a
discount in the case of death of the holder(s), forfeiture by a pledgee and
when ordered by a court of law.
Place of Encashment/discharge on maturity :
· Can be encashed/discharged at the post office where it is registered or any other post
office.7
Income Tax relief :
· Income Tax rebate is available on the amount invested and interest accruing every
year under Section 88 of Income tax Act, as amended from time to time.
· Income tax relief is also available on the interest earned as per limits fixed vide section
80L of Income Tax, as amended from time to time.
**********************
KISAN VIKAS PATRA :
Who can purchase :
o An adult in his own name or on behalf of a minor,
o A minor,
o A Trust,
o Two adults jointly.
Where available :
o Available for purchase/issue at Post Offices.
Maturity amount / period :
o With effect from 1st March, 2003, invested amount doubles on maturity
after Eight Years and Seven months.
Nomination :
o Nomination facility is available.
Denomination / Deposit limits :
o Certificates are available in denominations (face value) of Rs. 100, Rs.
500, Rs. 1000, Rs. 5000, Rs. 10,000 & Rs. 50,000.
o There is no maximum limit for purchase of the certificates.
Tax Benefits :
o No income tax benefit is available under the scheme. However the deposits
are exempt from Tax Deduction at Source (TDS) at the time of withdrawal.
Premature encashment :
o Premature encashment of the certificate is not permissible except at a
discount in the case of death of the holder(s), forfeiture by a pledgee and
when ordered by a court of law.
Place of Encashment/discharge on maturity :
· Can be encashed/discharged at the post office where it is registered or any other post
office.
**********************8
PUBLIC PROVIDENT FUND SCHEME :
Who can open account under the scheme :
· An individual :
o in his own name,
o on behalf of a minor of whom he is a guardian,
o a Hindu Undivided Family.
Where to open an account :
· at designated post offices throughout the country and
· at designated branches of Public Sector Banks throughout the country.
Maturity period :
· The account matures for closure after 15 years.
· Account can be continued with or without subscriptions after maturity for block periods
of five years.
Nomination :
· Nomination facility is available.
Deposit limits :
· Minimum deposit required is Rs. 500 in a financial year.
· Maximum deposit limit is Rs. 70,000 in a financial year.
· Maximum number of deposits is twelve in a financial year.
Loans :
· Loans from the amount at credit in PPF account can be taken after completion of one
year from the end of the financial year of opening of the account and before
completion of the 5th year. The amount of withdrawal cannot exceed 40% of the
amount that stood to credit at the end of fourth year preceding the year of withdrawal
or at the end of preceding year whichever is lower.
Withdrawal :
· Premature withdrawal is permissible every year after completion of 5 years from the
end of the year of opening the account.
Transferability :
· Account can be transferred from one post office to another post office,
· from a bank to another bank; and
· from a bank to post office and vice-versa.
Pass Book :
· Depositor is provided with a pass book with entries of the deposited amounts, interest
credited every year and other particulars duly stamped by the post Office.
Interest :
· Interest at the rate, notified by the Central Government from time to time, is
calculated and credited to the accounts at the end of each financial year.
· Present rate of interest is eight per cent / per year since: 1st March, 2003.9
Income Tax relief :
· Income Tax rebate is available ‘on the deposits made’, under Section 88 of Income
tax Act, as amended from time to time.
· Interest credited every year is tax-free.
**********************
DEPOSIT SCHEME FOR RETIRING GOVERNMENT EMPLOYEES :
Who can open an account :
· Retired Central and State Governments’ employees.
· Retired Judges of the Supreme Court and High Courts.
 Where to open an account :
· At designated branches of Public Sector Banks throughout the country.
Maturity period :
· The account matures for closure after 3 years.
· Account can be continued with the whole or a part of the deposits after maturity.
Nomination :
· The account can be opened individually or jointly with his/her spouse.
· Nomination facility is available in respect of individual accounts.
Deposit limits :
· One time deposit with a minimum of Rs. 1000 to the maximum of the total
retirement benefits in multiple of one thousand rupees.ß Retirement benefits means :
· (i) Balance at the credit of employee in any of the Government Provident Funds.
· (ii) Retirement/Superannuation gratuity.
· (iii) Commuted value of pension.
· (iv) Cash equivalent of leave,
· (v) Savings element of Government insurance scheme payable to the employee on
retirement, and
· Arrears of retirement benefits, as defined in (i) to (v) above on implementation of Fifth
Pay Commission’s recommendations.
Withdrawals :
· Whole or a part of the deposits can be withdrawn at any time after expiry of the
normal maturity period of 3 years.
Premature withdrawal :
· Not permissible before completion of one year.
· Permissible after completion of one year and before completion of three years on
reduced interest rate.10
Interest :
· Interest at the rate, notified by the Central Government from time to time, is credited
and payable on half yearly basis at any time after 30th June and 31st December
everyyear.
· Present rate of interest is Seven per cent / per annum since: 1st
March, 2003.
Transferability :
· Account can be transferred from one public sector bank to another public sector bank
operating the scheme due to change of residence.
Pass Book :
· Depositor is provided with a pass book with entries of the deposited amount, interest
etc. and other particulars by the bank.
Income Tax relief :
· Interest accrued / credited / paid is fully tax-free.
· Amount deposited under the scheme is free from wealth tax.
Banks authorised to accept deposits :
· Selected branches of the following banks are auithorised to accept deposits under
the scheme :
**********************
 DEPOSIT SCHEME FOR RETIRING EMPLOYEES OF PUBLIC SECTOR
COMPANIES :
Who can open an account :
· Retired/retiring employees of Public Sector Undertakings, Institutions, Corporations,
viz:
o Public Sector Banks,
o Life Insurance Corporation of India,
o General Insurance Corporation,
o Public Sector Companies, etc.
Where to open an account :
· At designated branches of Public Sector Banks throughout the country.
Maturity period :
· The account matures for closure after 3 years.
· Account can be continued with the whole or a part of the deposits after maturity.
Nomination :
· The account can be opened individually or jointly with his/her spouse.
· Nomination facility is available in respect of individual accounts.
Deposit limits :
· One time deposit with a minimum of Rs. 1000 to the maximum of the total
retirement benefits in multiple of one thousand rupees.11
Retirement benefits means :
· (i) Balance at the credit of employee in any of the Government Provident Funds.
· (ii) Retirement/Superannuation gratuity.
· (iii) Commuted value of pension.
· (iv) Cash equivalent of leave,
· (v) Savings element of Government insurance scheme payable to the employee on
retirement, and
· Arrears of retirement benefits, as defined in (i) to (v) above on implementation of Fifth
Pay Commission’s recommendations.
Withdrawals :
· Whole or a part of the deposits can be withdrawn at any time after expiry of the
normal maturity period of 3 years.
Premature withdrawal :
· Not permissible before completion of one year.
· Permissible after completion of one year and before completion of three years on
reduced interest rate.
Interest :
· Interest at the rate, notified by the Central Government from time to time, is credited
and payable on half yearly basis at any time after 30th June and 31st December every
year.
· Present rate of interest is Seven per cent / per annum since: 1stMarch, 2003.
Transferability :
· Account can be transferred from one public sector bank to another public sector bank
operating the scheme due to change of residence.
Pass Book :
· Depositor is provided with a pass book with entries of the deposited amount, interest
etc. and other particulars by the bank.
Income Tax relief :
· Interest accrued / credited / paid is fully tax-free.
· Amount deposited under the scheme is free from wealth tax.

Mutual funds can be defined as the money-managing systems that are introduced to professionally invest
money collected from the public. The Asset Management Companies (AMCs) manage different types of
mutual fund schemes. The AMCs are supported by various financial institutions or companies.

Investment in mutual funds in India means pooling money in bonds, short-term money market, financial
institutions, stocks and securities and dishing out returns as dividends. In India, Fund Managers manage the
mutual funds. They are also referred to as portfolio managers. The mutual funds in India are regulated by
the Securities Exchange Board of India.

Types of Mutual Funds

Mutual funds have different structure and aims, which in turn enable us to classify them into various major
categories. These categories are:

• Closed-end mutual funds

• Open end funds
• Equity mutual funds
• Mid cap funds
• Large cap funds
• Growth funds
• Balanced funds
• Exchange Traded Funds (ETFs)
• Load mutual funds and No-Load mutual funds
• Value funds
• International mutual funds
• Money market funds
• Sector mutual funds
• Fund of funds (FoF)
• Index funds
• Regional mutual funds

Benefits of Mutual Funds

Mutual funds are preferred for their cost-effectiveness and easy investment process. By investing all the
money in a mutual fund, investors can buy stocks or bonds at lower trading charges. This is indeed one of
the main benefits, which is not available otherwise. You don't need to see which stock or bond would be
better to buy. Another advantage is diversification. Diversification stands for diffusing money across various
different categories of investments. There is every possibility that when one investment is down, the other
can be up. In simple terms, this is helpful in reducing risks.
Transparency, flexibility, professional investment management, variety and liquidity are some of the other
benefits of the mutual funds, which are not found in case of other investments to such an extent.

Risk versus Reward

Volatility in the market activity can be referred to as the risk in the mutual fund investment. The sudden
upward and downward sentiments of the markets and individual issues can be attributed to several key
factors. These factors comprise:

• Inflation
• Interest rate changes
• General economic scenario

The aforementioned factors are the main cause of worry amongst the investors. Most of the investors fear
that the value of the stock they have invested will fall considerably. However, it is here one can notice its
reward angle. It is this element of volatility that can also bring them substantial long-term return in
comparison to a savings account.

List of Mutual Fund Companies in India

Some of the popular firms that deal in mutual funds in India are:

• Reliance Mutual Funds

• HDFC
• ABN Amro
• AIG
• Bank of Baroda
• Canara Bank
• Birla Sun Life
• DSP Merrill Lynch
• DBS Chola Mandalam AMC
• Escorts Mutual
• Deutsche Bank
• ING
• HSBC
• ICICI Prudential
• LIC
• JP Morgan
• Kotak Mahindra
• Lotus India
• JM Financial
• Morgan Stanley
• State Bank of India (SBI)
• Sahara Mutual Funds
• Sundaram BNP Paribas
 • Taurus Mutual Funds
• Tata
• UTI
• Standard Chartered

Best Mutual Funds in India

Before knowing about the arguably best mutual funds in India, it is important to know the factors that actually
decide their fate in the market.

In order to get an actual ideal of the best performing mutual funds in the market, one needs to track its
current Net Asset Value or NAV. NAV stands for the latest market value of the holdings of a fund that brings
down the fund's liabilities, which are generally indicated in terms of per share amount. On a daily basis, most
of the funds' NAV is decided. This is determined after the trade closes on certain financial exchanges. The
net asset value of the mutual funds is ascertained at the end of the trading day. An increase in NAV signifies
rise in the holdings of the shareholder. The Fund Firm will then do the transaction on the shares along with
the sales fees. While open-ended net asset value of the mutual funds is issued daily, the close-ended NAV
of the mutual fund is released on a weekly basis.

Life Insurance is the fastest growing sector in India since 2000 as Government allowed Private
players and FDI up to 26%. Life Insurance in India was nationalised by incorporating Life
Insurance Corporation (LIC) in 1956. All private life insurance companies at that time were taken
over by LIC.

In 1993 the Government of Republic of India appointed RN Malhotra Committee to lay down a
road map for privatisation of the life insurance sector.

While the committee submitted its report in 1994, it took another six years before the enabling
legislation was passed in the year 2000, legislation amending theInsurance Act of 1938 and
legislating the Insurance Regulatory and Development Authority Act of 2000. The same year that
the newly appointed insurance regulator - Insurance Regulatory and Development
Authority IRDA --started issuing licenses to private life insurers.
List of Life Insurers (as of Sept, 2008)

Apart from Life Insurance Corporation, the public sector life insurer, there are 22 other private
sector life insurers, most of them joint ventures between Indian groups and global insurance
giants.

Life Insurer in Public Sector

1. Life Insurance Corporation of India

Life Insurers in Private Sector

 1. SBI Life Insurance
2. Metlife India Life Insurance
3. ICICI Prudential Life Insurance
4. Bajaj Allianz Life
5. Max New York Life Insurance
6. Sahara Life Insurance
7. Tata AIG Life
8. HDFC Standard Life
9. Birla Sunlife
10. Kotak Life Insurance
11. Aviva Life Insurance
12. Reliance Life Insurance Company Limited - Formerly known as AMP Sanmar LIC
13. ING Vysya Life Insurance
14. Shriram Life Insurance
15. Bharti AXA Life Insurance Co Ltd
16. Future Generali Life Insurance Co Ltd
17. IDBI Fortis Life Insurance
18. AEGON Religare Life Insurance
19. DLF Pramerica Life Insurance
20. CANARA HSBC Oriental Bank of Commerce LIFE INSURANCE
21. India First Life insurance company limited
22. Star Union Dia-ichi Life Insurance Co. Ltd

The main financial services offered by the Department of Posts are the Post Office Savings Bank.
It is the largest and oldest banking service institution in the country. The Department of Posts
operates the Post Office Savings Scheme function on behalf of the Ministry of Finance,
Government of India. Under this scheme, more than 20.50 crores savings account are operated.
These accounts are operated through more than 1,54,000 post offices across the country.

The Post offices provide a number of savings schemes like the Savings Account Schemes,
Recurring Deposit Schemes, Time Deposit Schemes, Public Provident Fund Schemes, Monthly
Income Schemes, National Savings Certificates, Kisan Vikas Patras, and Senior Citizens�
Savings Scheme. A brief of the various schemes is as follows:

Investment
Interest
Scheme Tenure Denominations Salient Features Tax rebate
Rates
and limits
 Min: Rs. 50 Max:
No
Post Office 3.5% p.a. On Rs. 1 lakh for Interest is
specific Cheque facility
Savings individual and individual and 2 tax-free u/s
or fix available
Account joint account lakhs for joint 80L
tenure
account
One withdrawal up
to 50% of the
5 years.
5-Year balance is allowed
Can be Min: Rs. 10 per
Post Office 7.5% after one year. Full
renewed month or multiples No tax
Recurring compounded maturity value
for of Rs. 5 Max: No rebate
Deposit quarterly allowed on R.D. 6 &
another 5limit
Account 12 months advance
years
deposits earn
rebate.
6.25% 1 year Long-term accounts
6.50% 2 years could be closed
after 1 year for Investment
7.25% 3 years
discounted interest. qualifies for
Post Office
Min: Rs. 200 and its Accounts could be deduction
Time
multiple thereof closed after 6 u/s 80C.
Deposit
Max: No limit months but before a Interest is
Account 7.50% 5 years year for no interest. tax-free u/s
Interest is 80L
calculated quarterly
but payable yearly.
Account if closed
after 1 year but
before 3 years will
suffer a deduction
Min: Rs. 1500 per
of 2% of the
month or multiples
Post Office deposit. Account if
of it.Max: Rs. 4.5 Interest is
Monthly closed after 3 years
8% p.a. 6 years lakhs for individual tax-free u/s
Income will suffer a
account and Rs. 9 80L
Account deduction of 1% of
lakhs for joint
the deposit. On
account
maturity, bonus of
5% on principal
amount is
admissible
Withdrawal can be
made every year
Investment
Min: Rs. 500 in 1 after the 7th
15-year qualifies for
year Max: Rs. financial year. From
Public 8% p.a. deduction
15 years 70000 in 1 year the 3rd financial
Provident compounded u/s 80C.
tenure Deposits can be year, loan can be
Fund yearly Interest is
made in lump-sum availed against
Account tax-free u/s
or 12 installments PPF. No attachment
80L
under court decree
order.
Kisan 8.4% --- No limits. A single holder No tax
Vikas compounded Investment certificate can be benefits
Patra yearly. Money denominations purchased by an
doubles in 8 available are of Rs. adult. A certificate
years and 7 100, Rs. 500, Rs. can also be
 1000, Rs. 5000, Rs.
10,000, in all Post
purchased jointly by
months Offices and Rs.
two adults.
50,000 in all Head
Post Offices.
Investment
Min: Rs. 100. Also as well as
8% p.a. available in the interest
National A single holder
compounded denominations of deemed to
Savings certificate can be
half-yearly but 6 years Rs. 100/-, 500/-, be re-
Certificate purchased by an
payable after 1000/-, 5000 & Rs. invested
(VIII issue) adult.
maturity 10,000/-. Max: no qualifies for
limit deduction
u/s 80C.
Age should be
above 60 years or
55 years above if
retired under
superannuation.
Account if closed
Senior Only 1 deposit Investment
after 1 year will
Citizens� allowed in multiple qualifies for
9% p.a. 5 years suffer a deduction
Savings of Rs. 1000. Max is deduction
of 1.5% interest and
Scheme Rs. 15 lakhs u/s 80C.
after 2 years will
suffer a deduction
of 1% interest. TDS
is made on interest
if it exceeds Rs.
10000 p.a.

A unit-linked insurance plan (ULIP) is a type of life insurance where the cash value of a policy
varies according to the current net asset value of the underlying investment assets. It allows
protection and flexibility in investment, which are not present in other types of life insurance such
as whole life policies. The premium paid is used to purchase units in investment assets chosen
by the policyholder.

ULIP came into play in the 1960s and is popular in many countries in the world.

As times progressed the plans were also successfully mapped along with life insurance need
to retirement planning. In today's times, ULIP provides solutions for insurance planning, financial
needs, and many types of financial planning including children’s marriage planning.

In India investments in ULIP are covered under Section 80C of IT Act. However, the concept of
having an investment and insurance by the same instrument was challenged by the market
regulator SEBI which took up the matter to the Supreme Court of India .The Indian government
brought down curtains on the two-month long tussle between the regulators by ruling that Unit-
linked Insurance Products (Ulips) will be governed by the Insurance Regulatory and Development
Authority (IRDA).[

A fixed deposit is meant for those investors who want to deposit a lump sum of money for a fixed
period; say for a minimum period of 15 days to five years and above, thereby earning a higher rate
of interest in return. Investor gets a lump sum (principal + interest) at the maturity of the deposit.
Bank fixed deposits are one of the most common savings scheme open to an average investor.
Fixed deposits also give a higher rate of interest than a savings bank account. The facilities vary
from bank to bank. Some of the facilities offered by banks are overdraft (loan) facility on the
amount deposited, premature withdrawal before maturity period (which involves a loss of interest)
etc. Bank deposits are fairly safer because banks are subject to control of the Reserve Bank of
India.

Features
Bank deposits are fairly safe because banks are subject to control of the Reserve Bank of India
(RBI) with regard to several policy and operational parameters. The banks are free to offer varying
interests in fixed deposits of different maturities. Interest is compounded once a quarter, leading to
a somewhat higher effective rate.

The minimum deposit amount varies with each bank. It can range from as low as Rs. 100 to an
unlimited amount with some banks. Deposits can be made in multiples of Rs. 100/-.

Before opening a FD account, try to check the rates of interest for different banks for different
periods. It is advisable to keep the amount in five or ten small deposits instead of making one big
deposit. In case of any premature withdrawal of partial amount, then only one or two deposit need
be prematurely encashed. The loss sustained in interest will, thus, be less than if one big deposit
were to be encashed. Check deposit receipts carefully to see that all particulars have been properly
and accurately filled in. The thing to consider before investing in an FD is the rate of interest and
the inflation rate. A high inflation rate can simply chip away your real returns.

Returns
The rate of interest for Bank Fixed Deposits varies between 4 and 11 per cent, depending on the
maturity period (duration) of the FD and the amount invested. Interest rate also varies between
each bank. A Bank FD does not provide regular interest income, but a lump-sum amount on its
maturity. Some banks have facility to pay interest every quarter or every month, but the interest
paid may be at a discounted rate in case of monthly interest. The Interest payable on Fixed Deposit
can also be transferred to Savings Bank or Current Account of the customer. The deposit period can
vary from 15, 30 or 45 days to 3, 6 months, 1 year, 1.5 years to 10 years.

Duration Interest rate (%) per annum

 15-30 days 4 -5 %

30-45 days 4.25-5 %

46-90 days 4.75--5.5 %

91-180 days 5.5-6.5 %

181-365 days 5.75-6.5 %

1-2 years 6-8 %

2-3 years 6.25-8 %

3-5 years 6.75-8

Advantages
Bank deposits are the safest investment after Post office savings because all bank deposits are
insured under the Deposit Insurance & Credit Guarantee Scheme of India. It is possible to get a
loans up to75- 90% of the deposit amount from banks against fixed deposit receipts. The interest
charged will be 2% more than the rate of interest earned by the deposit. With effect from A.Y.
1998-99, investment on bank deposits, along with other specified incomes, is exempt from income
tax up to a limit of Rs.12, 000/- under Section 80L. Also, from A.Y. 1993-94, bank deposits are
totally exempt from wealth tax. The 1995 Finance Bill Proposals introduced tax deduction at source
(TDS) on fixed deposits on interest incomes of Rs.5000/- and above per annum.
 Recurring Deposit
The Recurring deposit in Bank is meant for someone who want to invest a specific sum of money
on a monthly basis for a fixed rate of return. At the end, you will get the principal sum as well as
the interest earned during that period. The scheme, a systematic way for long term savings, is
one of the best investment option for the low income groups.

Features
The minimum investment of Recurring Deposit varies from bank to bank but usually it begins from
Rs 100/-. There is no upper limit in investing. The rate of interest varies between 7 and 11
percent depending on the maturity period and amount invested. The interest is calculated
quarterly or as specified by the bank. The period of maturity ranging from 6 months to 10 years.

The deposit shall be paid as monthly installments and each subsequent monthly installment shall
be made before the end of the calendar month and shall be equal to the first deposit. In case of
default in payment, a default fee is chargeable for delayed deposit at the rate of Rs. 1.50/- for
every Rs. 100/- per month for deposits up to 5 years and Rs. 2/- per Rs. 100/- in case of longer
maturities.

Since a recurring deposit offers a fixed rate of return, it cannot guard against inflation if it is more
than the rate of return offered by the bank. Worse, lower the gap between the interest rate on a
recurring deposit and inflation, lower your real rate of return. Premature withdrawal is also
possible but it demands a loss of interest.

Returns
The rate of interest varies between 7 and 11 percent depending on the maturity period and
amount invested. The interest is calculated quarterly or as specified by the bank.

Maturity amount in 2 years

Amount invested per month
(5%interest)

Rs 100 Rs 2626

Rs 500 Rs 13,132

Rs 750 Rs 19,698

Rs 3000 Rs 78,792

Advantages
Some Nationalised banks are giving more facilities to their customer, State Bank of India give
Free Roaming Recurring Deposit facility to their customers. They can transfer their account to
any branch of SBI free. Tax benefit on the interest earned on Recurring Deposit up to Rs 12000
Tax Deductible at source if the interest paid on deposit exceeds Rs 5000/-per customer, per year,
per branch.
How to open an Account
A Recurring Bank Deposit account can be opened at any branch of a bank that offers this facility.
However, some banks insist that you maintain a savings bank account with them to operate a
Recurring Bank Deposit account. The terms and conditions vary from bank to bank. When a
depositor opens a Recurring Bank Deposit account with a bank, a pass-book or an account
statement is issued to him.