Govt permits banks to sell more small savings schemes like NSCs, MIS

Govt permits banks to sell more small savings schemes like NSCs, MIS

Context

• The govt allows banks, including top 3 private lenders, to accept deposits under small savings schemes like national saving certificates (NSCs), Recurring deposits and Monthly income scheme (MIS). Until now, these small savings schemes were sold through post offices

About notification

• 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
• All public sector banks and top three in the private sector — ICICI Bank, HDFC Bank and Axis Bank — to receive subscription from the expanded portfolios. So far, these banks were allowed to receive subscription under Public Provident Fund, Kisan Vikas Patra-2014, Sukanya Samriddhi Account, Senior Citizen Savings Scheme-2004

Impact

• Increased outlets for selling small savings scheme would result in higher mobilisation under the scheme.

Interest rate on various schemes

• Public provident fund (PPF) scheme will fetch annual rate of 7.8%
• Kisan Vikas Patra (KVP) investments will yield 7.5% and mature in 115 months.
• Sukanya Samriddhi Account Scheme will offer 8.3% annually.
• The investment on 5-year Senior Citizens Savings Scheme will yield 8.3%. The interest rate on the senior citizens scheme is paid quarterly.
• Interest rates for small savings schemes are to be notified on a quarterly basis since 1 April 2016,