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Home » Building Wealth Gradually: The Power of Small Savings Schemes in India

Building Wealth Gradually: The Power of Small Savings Schemes in India

Having the ability to handle money effectively goes beyond meeting your immediate needs.  The key aspect of managing money is making wise investments, allowing your hard-earned money to work for you. One investment option provided by the government of India is small savings schemes.

Whether you’re a seasoned investor or just starting to dip your toes into the world of finance,  small saving schemes offer a plethora of benefits that are too good to ignore. From high interest rates and tax benefits to flexible investment options,  there’s something for everyone.  

In this blog post,  we’re going to dive into the world of small savings schemes in India. These schemes are designed to help individuals like you make the most of their hard-earned money and achieve their financial

From fixed deposit accounts to recurring deposits and everything in between, we’ll explore the different options available and provide you with all the information you need to make smart savings decisions. 

building wealth gradually: the power of small savings schemes in India

But before that,  we must understand what is small savings scheme. 

What are Small Savings Schemes?

The Small Savings Schemes were introduced to promote savings among individuals with low incomes.  These schemes provide attractive interest rates,  motivating people to invest to secure a stable future or as a precautionary

Similar to a Fixed Deposit (FD),  this scheme allows individuals to earn annual interest and withdraw it at their convenience. 

But how beneficial is it for people in the low-income group? Let’s see.


Advantages of Small Savings Schemes

Long-term benefits

By participating in small savings schemes,  individuals have the opportunity to reach their long-term goals,  such as planning for retirement,  funding their children’s education,  and covering the costs of their children’s weddings. 

Various small savings schemes: 

  • There is a wide range of savings schemes currently accessible.  
  • The advantages differ based on the specific scheme and sector.  For instance,  the Pradhan Mantri Jan Dhan Yojana aims to support individuals who are living below the poverty line,  while the Sukanya Samriddhi Yojana provides financial assistance specifically for girl children. 


Maintaining and investing in the schemes is a straightforward process,  with the majority of contributions being conveniently made online. 

Security and safety

The contributions towards the schemes carry minimal risk and are safe and secure,  as they were initiated by the Indian Government. 

Did you know around 69% of the households in India struggle with financial insecurity?

This is why small savings schemes in India have become so important let’s see the types of small savings schemes available in India. 

Financial Safety: Small Savings Schemes In India

Post Office Monthly Income Scheme (MIS)

The Post Office Monthly Income Scheme (POMIS) allows you to make an investment and receive a consistent monthly interest payment.  This scheme is accessible at any post office for your convenience. 

  • Tenure: 5 years
  • Interest rate: 6. 6%
  • Maximum Investment: ₹ 4. 5 lakh
  • Minimum Investment: ₹ 1, 500
  • Tax on interest: Yes
  • Deduction on Principal: No

National Savings Certificate (NSC)

You can buy this tax-saving investment from any post office.  It is a secure investment that offers a guaranteed fixed return.  Supported by the Indian government,  this investment scheme is popular among cautious investors or those looking to vary their portfolio. 

  • Tenure: 5 years
  • Interest rate: 6. 8%
  • Maximum Investment: None
  • Minimum Investment: ₹100
  • Tax on interest: No (Interest is tax-deductible)
  • Deduction on Principal: Yes

Public Provident Fund (PPF)

The popularity of PPF as a long-term saving and investment product is attributed to its benefits in terms of tax savings,  safety,  and returns.  The National Savings Institute,  under the Finance Ministry,  introduced PPF to the public in 1968. 

  • Tenure: 15 years
  • Interest rate: 7. 1%
  • Maximum Investment: ₹ 1. 5 Lakh per year
  • Minimum Investment: ₹ 500 per year
  • Tax on interest: Not taxable
  • Deduction on Principal: Yes

Senior Citizens Savings Scheme (SCSS

The Senior Citizen Savings Scheme (SCSS) was created to cater to individuals who are 60 years old or above.  Additionally,  those who have chosen the Voluntary Retirement Scheme (VRS) and fall within the age range of 55-60 can also select SCSS as an option. 

  • Tenure: 5 years
  • Interest rate: 7. 4%
  • Maximum Investment: ₹ 15 Lakh
  • Minimum Investment: ₹ 1, 000
  • Tax on interest: Yes
  • Deduction on Principal: Yes

Sukanya Samriddhi Yojana (SSY)

The Prime Minister of India,  Narendra Modi,  initiated this program to ensure the future of girls under the age of 10.  Parents or guardians can open an SSY account for their daughter at any bank or post office.  Each household is limited to opening a maximum of two accounts,  one for each girl child. 

  • Tenure: 21Years
  • Interest rate: 7. 6%
  • Maximum Investment: ₹ 1. 5 Lakh
  • Minimum Investment: ₹ 1000
  • Tax on interest: No
  • Deduction on Principal: Yes

Kisan Vikas Patra (KVP)

The Indian Post introduced a savings certificate scheme in 1988 called the Kisan Vikas Patra.  This scheme is specifically tailored for farmers.  It is considered one of the most secure investment options for individuals with a lower risk tolerance,  providing a means to build wealth. 

  • Tenure: 5 Years
  • Interest rate: 6. 9%
  • Maximum Investment: None
  • Minimum Investment: ₹ 1000
  • Tax on interest: Yes
  • Deduction on Principal: No

Chit Fund

A chit fund is a financial product that serves as both a means of saving and obtaining credit.  It has a pre-established value and duration,  with a set number of participants making monthly contributions until the term concludes. 

  • Predetermined value and duration
  • Credits and savings combined in a single scheme
  • Lower interest rate than most money lenders
  • Higher returns than saving accounts and bank FDs

Post Office Savings Account 

The post office savings account is comparable to your typical savings account,  but it provides a slightly higher interest rate.  It is renowned for its guaranteed returns and is well-suited for investors who are less inclined to take risks. 

  • Tenure: None
  • Interest rate: 4%
  • Maximum Investment: None
  • Minimum Investment: ₹ 500
  • Tax on interest: Yes
  • Deduction on Principal: No

FAQ: Small Savings Schemes

Which is the best saving scheme in India? 

Each of the small savings  schemes mentioned above provides varying interest rates and tax advantages.  These schemes are designed to serve different groups of people.  You can select the one that you qualify for and that aligns with your financial objectives,  as it will provide beneficial outcomes. 

What is a mutual fund equity-linked savings scheme? 

The Equity-Linked Savings Scheme (ELSS) is a mutual fund category that allocates funds to a company’s equities (stocks).  These schemes are widely recognized as some of the most effective tax-saving options. 

How is interest calculated for NSC?

The National Savings Certificate (NSC) is a government-backed savings scheme that offers an attractive annual interest rate of 7. 6%.  It is a fixed-income investment option that can help investors grow their savings over time. 


Small savings schemes in India offer a great opportunity for individuals to secure their financial future.  From the popular Public Provident Fund (PPF) to the National Savings Certificates (NSC) and the Kisan Vikas Patra (KVP),  there are various options available to suit different needs and goals.  

These schemes not only provide a safe and reliable way to save money but also offer attractive interest rates that can help your savings grow over time. 

Whether you’re looking to save for retirement,  education,  or any other purpose,  exploring the different small savings schemes in India is worth considering.  It’s never too late to start saving,  so take advantage of these opportunities and secure your financial future today.

Read More – SustVest