Banking In India

Types of Saving Schemes in India

By October 29, 2022 No Comments

The Indian government, banks, or other public sector financial organizations all introduce savings programs. They differ in terms of interest rates, time periods for investments, and tax treatment. Our financial readiness for unforeseen personal and medical situations is aided by saving schemes. It enables you to fulfil your own dreams as well as those of your family, such as pursuing further education for your children and arranging their marriage, among other goals. Savings scheme income can potentially be a source of supplemental income for some people. What’s more? It develops a disciplined saving habit over time. IPB one of the best bankers trainers institute in India will let you know more about types of saving schemes in India.

The benefit of saving programs is that they are sponsored by the government, providing total safety and security for your deposited money. Additionally, they offer good returns while having low risk. Savings program interest rates are usually updated every three to six months.

Benefits of Savings Schemes

The following is a list of the key benefits of investing in savings schemes:

  • Long-term advantages: By investing in savings plans, people can attain their long-term objectives, such as retirement plans, children’s schooling, and children’s marriage.
  • Different savings plans: There are many savings plans currently offered. The advantages differ depending on the sector and the plan. For instance, the Sukanya Samriddhi Yojana aids a female child financially, and the Pradhan Mantri Jan Dhan Yojana is intended to assist those who are living in poverty.
  • Hassle-free: The majority of contributions paid to the programs can be made online, and maintenance and investing are fairly straightforward.
  • Security and safety: Because the programs were established by the Indian Government, the payments paid to them are low risk, safe and secure.

Types of Saving Schemes

Public Provident Fund (PPF)

One of the most well-known and secure investing options in the nation is the Public Provident Fund (PPF) plan. Contributions paid to the plan and the interest earned on those contributions are both tax-exempt under Section 80C of the Income Tax Act. The program has a 15-year term and is open to both post offices and banks. The duration of the program can be extended by a person by an additional 5 years. Individuals are required to contribute a minimum of Rs. 500 and a maximum of Rs. 1.5 lakh on a yearly basis towards the scheme.

Employees’ Provident Fund (EPF)

The Employees’ Provident Fund Organization (EPFO) developed the EPF program with the primary objective of assisting employees with retirement savings. Organizations with more than 20 employees are required to make EPF contributions. 12% of the employee’s Dearness Allowance (DA) and base salary are each contributed by the employee and employer to the scheme. Employees may withdraw money from the plan in the event of a medical emergency, home building, land purchase, home loan repayment, etc. The EPFO chooses the interest rate on an annual basis.

National Pension System (NPS)

The Central Government started the NPS with the primary objective of giving people a consistent income after retirement. By making a nominal premium payment, employees can profit from the program. At the time of retirement, employees will get a lump sum payment, and a specific percentage will be paid back as pension on a monthly basis.

Sukanya Samriddhi Yojana Account (SSY)

To support a girl child’s future, Prime Minister Narendra Modi introduced the Sukanya Samriddhi Yojana (SSY) program. An SSY account can be created through post offices or banks, and the current interest rate offered by the system is 8.5%. The scheme allows deposits of up to Rs. 1.5 lakh, or Rs. 1,000, at any time during the calendar year. The account holder must make payments to the scheme for a total of 14 years, and the scheme has a 21-year maturity term. People can move their SSY accounts back and forth between banks and post offices.

Atal Pension Yojana (APY)

The primary objective of the Atal Pension Yojana (APY) program is to assist people who are living in poverty. People who labour in the unorganised sector and seek government assistance financially can benefit from the program. Individuals contribute very little to the programme in exchange for a pension when they reach retirement age. However, in order to take use of the scheme’s benefits, people must have an open savings account. The Atal Pension Yojana scheme is open to citizens between the ages of 18 and 40. Contributions towards the scheme must be made for a minimum duration of 20 years. Individuals are required to contribute very little to the plan; yet, if substantial payments are made, the pension will also be substantial. However people cannot choose any other savings plan if they choose the Atal Pension Yojana program.

Voluntary Provident Fund (VPF)

In contrast to the EPF system, which allows employees to contribute only 12% of their basic pay, the VPF scheme allows employees to contribute their entire basic salary. The EPF scheme will be affected by any contributions made to the VPF program and vice versa.

Kisan Vikas Patra (KVP)

The Kisan Vikas Patra certificate program is made available by Indian post offices. The current interest rate provided by the plan is 7.7%, and it is compounded annually. There is no maximum donation amount; however, there is a minimum commitment of Rs. 1,000. The money contributed to the plan doubles over the course of 112 months.
The certificate can be transferred from one person to another and from one post office to another, and individuals are allowed to add nominees to the program.  After 30 months have passed since the certificate’s issuance, individuals can encash it.

Senior Citizens Savings Scheme (SCSS)

The SCSS was established with the intention of assisting people 60 years of age and older. The SCSS benefits are also available to people who are between the ages of 55 and 60 who have opted for the Voluntary Retirement Scheme (VRS).
The SCSS has a 5-year term, and the scheme’s annual interest rate is 8.7%. Individuals must contribute a minimum of Rs. 1,000 to the scheme, and a maximum of Rs. 15 lakh may be invested. Additionally, people can move their SCSS accounts from a post office to a bank and the other way around. Tax deductions are provided for contributions made to the plan under Section 80C of the Income Tax Act.

National Savings Certificate (NSC)

One of the most well-liked programs in India is the NSC program. The scheme offers assured returns and tax advantages because the Indian government is supporting it. Individuals can invest in the plan at post offices, and it has a 5-year term. The interest rates for the program are set on a quarterly basis by the Indian government. Every year, the interest that is generated is compounded. There is no cap on the amount that can be contributed; however, there is a minimum payment of Rs. 100 required.
Individuals are qualified for tax benefits on their contributions to the plan under Section 80C of the Income Tax Act. The certificate may be transferred to another person’s name by an individual. However, you can only do this once.

Post Office Savings Scheme

The numerous savings plans that India Post provides are highly well-liked because the risks are quite low and the majority of the plans offer guaranteed returns. Any saving scheme account can be opened at the post office with ease and speed. The schemes’ numerous beneficial qualities contribute to their popularity.