Small Savings Schemes, Important Small Savings Instruments

Small Savings Schemes

• Context (TH): The government raised interest rates on select small saving schemes in line with the high-interest rates in the banking system.
• Small Savings Schemes are various schemes through which people can deposit (mostly fixed deposits) money with “Govt. of India” for a fixed tenure and earn interest after maturity.
• GOI offers these schemes through various Public and Private sector banks and Post Offices.
• The money goes into the Public Account of India and is kept separately under the National Small Savings Fund (NSSF).
• The interest rate on these small savings schemes has been aligned with G-Security rates of similar maturities (except Mahila Samman Saving Patra). 
• The interest rate is generally slightly higher than what banks offer on fixed deposits.
• So, every year, GOI receives money in NSSF (under the Public Account of India) and pays out to those whose deposits are maturing.