It has become very easy to invest in National Saving certificate. Because you are not required to search for a post office. Now you can subscribe NSC from your bank itself. The government has permitted banks to sell the NSC, Monthly Income Scheme and National Savings Recurring deposit. These schemes give you better interest rate. But, Till now these were only available at the post office.
This relaxation came to fulfil the union budget target. The government has wanted to accumulate 1 lakh crore through the small savings scheme. But until the end of September, It could collect only 40,000 crores. Hence, to promote these government schemes, the government has increased its reach.
You may be aware that many small savings schemes are already available at the banks. You can invest in PPF account, Sukanya Samrddhi Scheme, Senior citizen savings scheme and Kisan Vikas Patra through the banks. Your investment into these schemes goes to the government account and it gives the interest on it. The banks only play the role of intermediary. The banks get a small commission for their role.
The New Rule of Small Savings Scheme
In recent notifications, the Government of India has allowed banks to sell every small savings scheme. Along with the Public sector banks, 3 private banks have also got permission. These private banks are ICICI Bank, HDFC Bank and Axis Bank.
Recently allowed scheme are NSC, Time Deposit, Recurring Deposit and Monthly Income Account. The PPF account, Sukanya Samriddhi Account, Senior Citizen Savings Scheme and KVP are already available at the banks.
The banks can sell these scheme through all of the branches. However, banks have to make provision in their software for these schemes. There must be separate functionality for each scheme. Each scheme has a different mode of accounting, hence bank must make a provision for them.
If bank branches are on core banking solution, the bank can give online facility for the subscription of Small Savings Scheme. The non-core banking branches can also accept the contribution into these schemes.
The banks have to credit all the contribution of these scheme to the government account within a day. The government has an Account with the RBI for this purpose. If banks delay in deposit, they have to pay the penalty.
The banks have to give details of subscription and contribution to the government from time to time.
Aadhaar Is Mandatory
Now, the Aadhaar is mandatory to invest in small savings Scheme. The government has issued a notification in this regard. You may have noticed that gradually, each investment is getting linked to Aadhaar. The government is trying to curb black money through the Aadhaar.
Quarterly Interest Rate Fixation
Now, the government reviews the interest rate of small savings schemes for every quarter. Thus, it changes very frequently. However, you should be assured as it is linked to the market rate. You would get the similar interest rate as banks if not better.
Should You Invest in NSC, MIS and other Small Savings Schemes through the Banks?
Why Not? Often, investment through the banks is easier. You can use the online facility of the banks to invest in NSC or monthly income scheme. You might have enjoyed the ease of PPF account with the SBI or other banks. Today, you can open a PPF account or senior citizen savings account online.
It is easy to contribute into these scheme through your bank. As your small savings account gets connected to the existing saving account. Consequently, you can contribute within minutes. The withdrawal and loan also become very easy because of the linked saving account.
It is more convenient to visit a bank branch. Post offices may not be near to your residence. But, you choose a bank which is closer to you. It is easier to deal with same organisation instead of the different organisations.
However, sometimes, post offices might be a better option. In my case, the post office is nearer to my home and less crowded as well. So it depends on person to person.
New Post Office Schemes on Banking Platform
Let us give a brief summary about the small savings schemes which are now available in banks. You should know about them before the investment.
National Savings Certificate
- In this scheme, you invest lump-sum amount for 5 years.
- Once an interest rate is fixed does not change during the 5 years period.
- You get back maturity amount after 5 years. It consists the investment amount and interest.
- The investment into NSC gives you tax benefit under section 80C of the income tax act.
- you get the whole interest at the end of 5 years but, annual interest income becomes part of taxable income every year.
- After the maturity, the whole amount is credited to your given saving account.
- The scheme used to give certificates of different denominations as the proof of investment. You had to return those certificate to get back the money. However, the government has ended the practice of certificate for NSC as well as KVP.