Senior Citizens Savings Scheme a big hit! Small savings scheme collections for senior citizens have seen a significant increase, surpassing Rs 1 lakh crore in the first half of the fiscal year, according to an ET report. This surge comes after the government doubled the limit in the budget.
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To incentivize savings, the deposit limit under the Senior Citizen Savings Scheme was raised to Rs 30 lakh from Rs 15 lakh in the FY24 budget. The scheme offers an attractive interest rate of 8.2% since the June quarter, compared to 8% in the March quarter of FY23, with interest payable every quarter. The scheme has a tenure of five years, with an option for a three-year extension upon maturity, while premature closure is allowed with a penalty.
According to a senior finance ministry official, the Senior Citizen Savings Scheme has witnessed a two-and-a-half times higher mop-up compared to the same period in the previous fiscal year, when collections were Rs 40,000 crore.
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Additionally, a new small savings scheme for women, introduced in the budget, has also had a successful start, gathering Rs 13,500 crore by September 23. It is expected that the deposits will continue to rise in the coming months. The Mahila Samman Savings Certificate is a one-time small savings scheme available until March 2025. It has a maximum deposit limit of Rs 2 lakh, offering a fixed interest rate of 7.5% and partial withdrawal options.
The government aims to finance its fiscal deficit, projected at Rs 17.87 lakh crore, by budgeting Rs 4.71 lakh crore from the National Small Savings Fund (NSSF) in FY24. This is an increase from the revised estimate of Rs 4.39 lakh crore in FY23.
The robust inflows into these schemes will contribute to NSSF and help alleviate the government’s pressure to borrow from the market to finance its fiscal deficit. Market borrowing costs for the government have been increasing, with rising yields due to the Reserve Bank of India’s (RBI) 250-basis point hike in policy rates. The benchmark 10-year G-sec yield reached a seven-month peak of 7.4% on October 9, but has since eased to 7.33% as of Tuesday.
