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What are Small Savings Instruments

Small Savings Instruments:

The central government withdrew its orders of reducing the rates on all small savings instruments/schemes.

  • Small savings instruments help individuals achieve their financial goals over a particular period.
  • They are the major source of household savings in India.
  • The small savings instrument basket comprises 12 instruments.
  • Collections from all small savings instruments are credited to the National Small Savings Fund (NSSF).
  • Small savings instruments can be classified under three heads:
    • Postal Deposits: (comprising savings account, recurring deposits, time deposits of varying maturities, and monthly income scheme).
    • Savings Certificates: National Small Savings Certificate (NSC) and Kisan Vikas Patra (KVP).
    • Social Security Schemes: Sukanya Samriddhi Scheme, Public Provident Fund (PPF), and Senior Citizens‘ Savings Scheme (SCSS).
  • Rates of Small Saving Instruments:
    • The rates for small saving instruments are announced quarterly.
    • Theoretically, the rate changes are based on yields of government securities of the corresponding maturity. However, political factors also influence the rate change.
    • The Shyamala Gopinath panel (2010) constituted on the Small Saving Scheme had suggested a market-linked interest rate system for small savings schemes.