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National Savings Certificate Scheme is More Profitable Than FD’s; Details Inside

NCS is a fixed-income investment scheme available through post offices that pays 6.8% per year in interest.

Binita Kumari
This plan is part of a group of small savings plans whose interest rates are changed every quarter in response to changes in bond yields.
This plan is part of a group of small savings plans whose interest rates are changed every quarter in response to changes in bond yields.

Stock markets are unpredictable at a time when there are worldwide uncertainties surrounding the COVID-19 pandemic and the Russia-Ukraine conflict, and investors are looking for safe investment options. National Savings Certificates, fixed deposits, the public provident fund, and bonds are only a few examples.

What is National Savings Certificate?

National Savings Certificate is a fixed-income investment plan available via post offices. It is now offering a 6.8 percent annual interest rate. This plan is part of a group of small savings plans whose interest rates are changed every quarter in response to changes in bond yields. The NSC was launched as a safe and low-risk investment for small and middle-income investors.

Who can apply for NSC?

National Savings Certificates require a minimum investment of Rs 1,000. Following that, additional investments in multiples of Rs 100 can be made. Deposits are not subject to a maximum limit under the system.

— An adult can open a single-holder account for himself or on behalf of a minor.

— When a minor reaches the age of ten, he or she can open a single-holder account.

— Up to three people can open a joint 'A' Type account, which is payable to both holders jointly or to the survivor.

— Up to three people may open a joint 'B' Type account payable to either survivor.

— Loans can be acquired by pledging with banks.

— According to the rules, the transfer of an account opened on behalf of a minor or a person of unsound mind is not permitted unless the minor's or the person of unsound mind's guardian certifies in writing that the minor or the person of unsound mind is alive and that the transfer is for the minor's or the person of unsound mind's benefit.

For the April-June quarter, the government kept interest rates on modest savings instruments such as National Savings Certificates, unchanged. For the time being, the rate on NSC has been set at 6.8%. Interest rates on small savings accounts are reviewed every three months. The change is in line with the movement of similar-maturity benchmark government bonds. The current rates on a number of small savings instruments are listed below.

How is NSC better than Fixed Deposit?

Fixed deposit interest rates have recently been raised by HDFC Bank, Axis Bank, and Kotak Mahindra Bank for various tenures and amounts of deposits.

HDFC Bank currently offers interest rates on fixed deposits under Rs 2 crore that range from 5.1 to 5.6 percent, depending on the term and borrowers' profile. Different interest rates are offered to various profiles, such as women, senior citizens, and so on. Axis Bank currently offers interest rates of 4.45-4.65 percent on deposits of more than Rs 2 crore.

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