To encourage savings, the deposit limit under the Senior Citizen Savings Scheme was increased from Rs 30 lakh in the Budget for FY 2024. The scheme offers an attractive interest rate of 8.2% since the June quarter, compared to 8% in the March quarter of FY23, with interest payable quarterly. The scheme has a term of five years, with an option for a three-year extension upon maturity. Premature closure is permitted with a fine.
According to a senior finance ministry official, the Senior Citizen Savings Scheme has witnessed a two-and-a-half times higher clearance compared to the same period in the previous fiscal year when collections stood at Rs 40,000 crore.
PPF, Senior Citizen Savings, NSC, Sukanya Samriddhi, MIS, small savings schemes explained and compared
Moreover, a new small savings scheme for women, introduced in the Budget, has also had a successful take-off, raising Rs 13,500 crore by September 23. Deposits are expected to continue to rise in the coming months. The Mahila Samman savings certificate is a one-time small savings scheme available till March 2025. It has a maximum deposit limit of Rs 2 lakh, offers a fixed interest rate of 7.5% and partial withdrawal options.
The government aims to finance its fiscal deficit, which is estimated at Rs 17.87 lakh crore, by budgeting Rs 4.71 lakh crore from the National Small Savings Fund (NSSF) in FY24. This is an increase from the revised estimate of Rs 4.39 lakh crore in FY23.
Financing the deficit
The robust inflows into these schemes will contribute to the NSSF and help ease the government’s pressure to borrow from the market to finance its fiscal deficit. Market borrowing costs for the government have risen, with interest rates rising following the Reserve Bank of India’s (RBI) rate hike by 250 basis points. The benchmark 10-year G-sec yield hit a seven-month peak of 7.4% on October 9, but has since fallen to 7.33% on Tuesday.
