Indian Savers Had Chosen Equity Over Small Savings Schemes in 2017-18: Report

By Olga Robert
Subscribe to GoodReturns
For Quick Alerts
ALLOW NOTIFICATIONS  
For Daily Alerts

    The RBI (Reserve Bank of India) annual report for the financial year 2017-18 released in the last week on August, showed that the rate of growth in small savings schemes was almost nil for the period under review. The data on Indian household savings towards various financial assets showed that no fresh investments were made in small savings schemes like public provident fund (PPF), NPS (National Pension Scheme) or other post office schemes for the year.

    Indian Savers Had Chosen Equity Over Small Savings Schemes in 2017-18: Report

    However, the report also showed that gross financial savings had touched 11.9 percent in 2017-18 from 9.1 percent in 2016-17, while the contribution from savings dipped from 0.4 percent to nil. Experts suggest that this is primarily due to the fall in interest rates on the schemes while the Indian markets were breaking new records in the year 2017.

    Traditionally, Indian households preferably chose bank deposits, which they later moved from due to tax implications and lower interest returns. The shift was gradually made towards small savings schemes which have also seen a fall in 2017-18, primarily due to the unchanged interest rates. Many equity and mutual fund investments, on the other hand, yielded more than 8 percent in annual returns.

    The trend in 2018-19, however, could change because the once attractive tax-free long-term investment in equity is now being charged at the rate of 10 percent on any profits (capital gains) made over Rs 1 lakh. Additionally, there have been two consecutive hikes in repo rates in RBI's monetary policy meets, which will mean that interest rates on bank deposits and small savings schemes could be higher this time.

    Read more about: rbi small savings scheme
    Story first published: Wednesday, September 5, 2018, 12:06 [IST]
    Company Search
    Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'

    Find IFSC

    We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more