While investors with a high-risk appetite are savouring the high returns of 30 per cent given by Nifty50 in the fiscal year 2024, there are millions of conservative investors who remain content with their considerable exposure to fixed-income instruments.
Additionally, some aggressive investors allocate a portion of their portfolio to debt instruments to keep a portion of their wealth safe and secure.
Within fixed-income instruments, small savings schemes are the ones which are quite popular among the masses, and many investors opt for them for the fixed and assured returns they offer.
It is vital to note that the interest rates on small savings schemes for the June quarter (April- June) starting April 1, 2024, will remain unchanged. This was communicated through a Finance Ministry communication on March 8, 2024.
“The rates of interest on various Small Savings Schemes for the first quarter of FY 2024-25 starting from 1 April, 2024 and ending on 30th June, 2024 shall remain unchanged from those notified for the fourth quarter (1 January, 2024 to 31 March, 2024) of FY 2023-24,” reads the letter.
However, the interest rates for two small savings schemes were recently raised, starting January 1, 2024, albeit marginally. The current rates of interest which will continue to be in force from April 1, 2024, are as follows:
| Financial Instrument | Rate of interest (%) | Compounded frequency |
| Post office savings Account: | 4 | Annually |
| 1-year time deposit: | 6.9 | Quarterly |
| 2-year time deposit: | 7 | Quarterly |
| 3-year time deposit | 7.1 | Quarterly |
| 5-year time deposit: | 7.5 | Quarterly |
| 5-year recurring deposit: | 6.7 | Quarterly |
| Senior Citizen Savings | 8.2 | Quarterly and Paid |
| Monthly income account | 7.4 | Monthly and paid |
| National Savings Certificate (NSC) | 7.7 | Annually |
| Public Provident Fund (PPF) | 7.1 | Annually |
| Kisas Vikas Patra | 7.5 | Annually |
| Sukanya Samriddhi Account Scheme | 8.2 | Annually |
(Source: Department of Economic Affairs)
As we can see in the table above, Senior Citizen Savings and Sukanya Samriddhi Account offer the highest interest rate i.e., 8.2 per cent. National Savings Certificate offers 7.7 per cent and Kisan Vikas Patra (KVP) offers 7.5 per cent.
Additionally, the rate of compounding is also a significant factor to consider. The higher the compounding, the higher the return.
Here is a lowdown on a few of these schemes:
Post Office Savings Account: It is very similar to a bank savings account. It can be opened by depositing a minimum amount of ₹500 while the minimum withdrawal amount is ₹50.
There is no maximum limit. The interest rate offered is 4 per cent per annum on individual and joint accounts.
ALSO READ: Govt raises interest rates on two small savings schemes by 10-20 bps for Jan-March 2024
National Savings Certificate: Investors can open an account by investing a minimum of ₹1,000 and there is no maximum limit. The rate of interest is 7.7 percent which is compounded annually but payable at maturity.
PPF: Depositors can invest a minimum of ₹500 while the maximum amount is ₹1.5 lakh in a financial year. The rate of interest is 7.1 per cent per annum compounded yearly.
Kisan Vikas Patra: Investors can invest ₹1,000 and in multiples of ₹100 and there is no maximum limit. The rate of interest offered is 7.5 per cent compounded annually.
Sukanya Samriddhi Account Scheme: One can open this account by investing a minimum of ₹250 while the maximum is ₹1.50 lakh in a financial year. The rate of interest is 8.2 per cent per annum with effect from January 1, 2024.
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Published: 29 Mar 2024, 07:54 PM IST