Small savings schemes are government-backed financial instruments designed to encourage regular saving among citizens. Out of their 10 broad categories, five schemes offer interest rates of 7.5 per cent and above. Also known as government-backed schemes, these fixed-income instruments carry a sovereign guarantee, wherein the principal amount is protected by the government. Offering assured returns, they are normally considered safer than commercial bank FDs.

These schemes enable investors to comfortably beat inflation. The RBI targets keeping inflation within 200 bps of its 4.0 per cent target over the medium term. Let’s look at these schemes in detail, as per information available on the India Post website:

• Interest rate: 7.5 per cent per annum
• Available only to resident Indian individuals
• Two types of joint accounts are available: Joint Account A, which is operated by all depositors jointly, and Joint Account B, which can be operated by any one of the depositors
• Account can be opened with a minimum deposit of Rs 1,000 and in multiples of Rs 100 thereafter
• No maximum investment limit
• Interest is compounded quarterly and paid annually
• The deposit has a tenure of five years
• The account cannot be closed prematurely before the completion of four years from the date of deposit
• If the account is closed after four years but before maturity, any interest already paid may be recovered from the repayment amount as per applicable rules
• The deposit amount becomes repayable on completion of five years from the date of opening

• Interest rate: 8.2 per cent per annum
• Available only to resident Indians
• Individuals aged 60 years and above are eligible
• Individuals who have retired on superannuation between the ages of 55 and 60 years may also be eligible, subject to prescribed conditions
• Retired defence personnel aged 50 years and above are eligible, subject to scheme rules
• Minimum investment is Rs 1,000, with investments allowed in multiples of Rs 1,000
• Maximum investment limit is Rs 30 lakh
• Interest is paid quarterly
• The scheme has a maturity period of five years, with an option to extend it for an additional three years
• Premature closure is permitted, subject to penalties
• Closure between one year and two years results in a deduction of 1.5 per cent of the deposit amount
• In the event of the account holder’s death, the deposited amount along with accrued interest is paid to the nominee or legal heir

• Interest rate: 7.7 per cent per annum
• Available only to resident Indians
• Individuals can open a single-holder or joint account
• A guardian may open an account on behalf of a minor above 10 years of age or a person of unsound mind
• Minimum investment is Rs 1,000 and thereafter in multiples of Rs 100
• No maximum investment limit
• The certificate matures five years from the date of investment
• Interest accrues annually and is reinvested in the certificate until maturity
• Premature closure is generally not permitted, except in specific cases such as the death of the sole holder or all holders in a joint account, or under a court order

• Interest rate: 7.5 per cent per annum
• Available only to resident Indian citizens
• Two types of joint accounts are available: Joint Account A, operated jointly by all depositors, and Joint Account B, which can be operated by any one of the depositors
• A guardian may open an account on behalf of a minor above 10 years of age or a person of unsound mind
• Minimum investment is Rs 1,000 and thereafter in multiples of Rs 100
• No maximum investment limit
• The maturity value is determined based on the interest rate applicable on the date of account opening
• The investment amount doubles over the prescribed maturity period applicable at the time of investment
• Its low minimum investment requirement makes it accessible to a wide range of investors

• Interest rate: 8.2 per cent per annum
• Designed to promote savings for the future financial needs of a girl child
• The account can be opened by a parent or legal guardian in the name of a girl child
• The guardian operates the account until the account holder attains 18 years of age
• Up to 50 per cent of the balance at the end of the preceding financial year can be withdrawn for higher education after the girl attains 18 years of age
• Withdrawals can be made as a lump sum or in instalments, subject to prescribed limits
• The account matures 21 years from the date of opening
• Premature closure is permitted in certain circumstances, including the marriage of the account holder after attaining the prescribed age under the scheme rules