Small Saving Media

If we compare the forms of financial saving,next to commercial banks ,the small saving organizations mobilize the largest volume of saving ,followed by co-operative banks ,and the UTI. Even after the two decades of nationalized banking,it is the agency of Post Offices, through which small saving scheme are administered, that has reached the largest no of villages in India.

Small Saving are directly available to Central Govt ,technically, as a part of budgetary resources and they constitute the non-marketable debt of the govt.

Post Office small saving Bank -included in the Union List vide Item no 39 of seventh schedule of constitution of India.

Characteristics of the Small Saving Media

1. These assets represent medium-term and long term investment opportunities.
2. Many of them are in the form of reinvestment plans.
3. These assets are liquid .With cumulative time deposit ,50% of the outstanding balance can be withdrawn twice ,which may be repaid in lump sum or in installments.

Types of instruments in small saving media

• Post Office Saving Bank Deposit(POSBD)

This Scheme has been in existence since 1896.At present it pays 4.0 % rate of interest.The limit of investment are a minimum of Rs 20 and Maximum of Rs 1 lakh in case of single account and Rs 2 lakh in case of a joint account.the interest earn is tax free ,but the amount of deposit itself is not deductible for tax purpose .

• Post Office Time Deposit (POCTD)

Interest rate is payable annually but calculated quarterly .from April 2014, the Interest rate is 8.4% for 1 or 2 or 3 year maturity while 8.5% for 5 year maturity.Minimum 200 and maximum is limitless to be deposited.When TD account is closed before on year ,interest @ saving account will be payable from time to time.After maturity account will be renewed for two year maturity with interest rate as above.The Investment under 5 year is qualifies the benefit of the Income tax under Act ,1961 from April 2007.

• Post Office Recurring Deposit (PORD) 

Interest rate payable is 8.4% (compounded quarterly)from April 2014.Maturity is 5 year and a minimum of 10 Rs can be deposited per month and with no max limit.One Withdrawal up to the 50% can be made after one year.

• Monthly Income scheme(MIS) Account

from April 2014 ,interest rate is 8.4 % .Maximum Investment limit is 4.5 lakh for single Account and  9 lakh for joint account.Maturity period is 5 year. all joint account holder will be equal shares. interest  can be drawn through auto credit in saving account in the same post office.We can prematurely en-cashed after 1 year but before 3 year at discount of 2% on deposit and after 3 years on discount of 1% on deposit.

• Senior Citizen Saving Scheme(SCSS)Account

The Interest rate is 9.3% .The account is opened for senior citizen for age of 60 or more.An individual between age of 55-60 can also open with some condition of retirement benefit.The maturity period is 5 year.There should be one deposit in multiple of Rs 1000 and maximum not exceeding Rs 1.5 lakh. Interest can be drawn through auto credit into the saving account opened in same post office.Premature closure is allowed after one year with a deduction of 1.5% of  deposit and after 2 years 1% of deposit.A TDS as deducted on interest earned , if the amount is more than 10000 per annum.

• National Saving Certificate (NSC)

Scheme is designed specially for govt employee,Businessman and other salaried person who are income tax assesses.No maximum limit for investment.Rate of interest is 8.5% for NSC VIII Issue while the interest is 8.8% for the NSC IX Issue.No tax deduction at source.Certificate Can be kept as collateral property to get loans from banks .Buy NSC every month for 5 years the reinvest it -on retirement it will fetch you monthly pension as NSC mature.Deposit qualify the tax  rebate under section 80 C of It Act.

• Kisan Vikas Patra(KVP)

Amount invested doubles in 100 month .Minimum deposit of Rs 1000 and no max limit .KVP can be purchased on any departmental post office.Certificate can be en-cashed after 2.5 years from date of issue.

• Sukanya Samriddhi Account 

Account is opened by a guardian in the name of a girl but maximum two account in the name of two girls.Account can be open at the age of 10 year of the girl.Interest rate is 9.3% per annum compounded yearly.Minimum Rs 1000 and Max Rs 1.5 lakh can be deposited in a FY.A minimum of Rs 1000 is necessary to deposit in a FY otherwise a penalty of Rs 50 has to be paid for the revival of the account.A 50% of total balance standing at the end of FY can be drawn at he age of 18 year of the girl .The account can be closed after 21 year of the girl’s age.

All these account can be opened at any branch of the Post Offices.There are other facilities also like nomination ,transfer of account from one branch to other, making a single account joint after sometimes, any no of accounts can be opened at any branch except POSBD .

Click here for government certification in Accounting, Banking & Finance