17-06-2025
With FD interest rates on a downswing, is this the right time to switch to small savings schemes?
Soon after the Reserve Bank of India (RBI) cut its repo rate by 50 basis points, most banks have followed suit by cutting interest rates on their fixed deposits (FDs). Now most banks offer anywhere between 6.25 to 6.5 percent per annum on their term deposits.
This is enough to prompt investors to look beyond fixed deposit for safe investment options. Another alternative for investors is to invest in small savings schemes. These are also known as post office savings schemes.
I. National Savings Recurring Deposit Account: This offers 6.7 percent per annum with a minimum ₹ 100 contribution. The scheme gets maturity five years from the date of opening.
II. National Savings Time Deposit Account: This scheme offers 6.9 percent interest rate per annum for one year, 7 percent for two years, 7.1 percent for three years and 7.5 percent for five years.
III. National Savings Monthly Income Account: This account offers 7.4 percent per annum payable monthly. The minimum amount for opening of account is ₹ 1,000 and maximum investment limit is ₹ 9 lakh (single account) and ₹ 15 lakh in joint account.
IV. Senior Citizens Savings Scheme Account: This account offers 8.2 percent per annum and one can make one deposit in the account in multiple of ₹ 1,000 not exceeding ₹ 30 lakh. Account Interest (%) RD Account 6.7 Time deposit – 1 year 6.9 Time deposit - 2 years 7 Time deposit - 3 years 7.1 Time deposit - 5 years 7.5 National Savings Monthly Income Account 7.4 Senior Citizens Savings Scheme 8.2 PPF 7.1 Sukanya Samriddhi Yojana 8.2 National Savings Certificate 7.7
V. PPF (Public Provident Fund) Account: Another popular alternative to fixed deposit is PPF which offers 7.1 percent interest, and the maximum investment limit is ₹ 1.5 lakh.
VI. Sukanya Samridhhi Account: This offers 8.2 percent per annum and the maximum amount which one can invest in the account is ₹ 1.5 lakh per year.
VII. NSC (National Savings Certificate): NSC offers 7.7 per cent per annum and there is no maximum investment limit.
VIII. KVP (Kisan Vikas Patra): It offers 7.5 per cent per annum compounded annually. The minimum investment is ₹ 1,000 and there is no maximum limit.
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