Interest rates in India have fallen sharply over the last 1-2 years, which has left many investors, who are dependent on interest income in a precarious situation.
Banks deposits from big banking names like HDFC Bank, State Bank of India, Punjab National Bank or ICICI Bank generate a maximum interest rate of 5.5 per cent per annum, which is ridiculously low. Here are 4 government deposits or schemes that can give you an interest rate ranging from 7 to 8 per cent.
Public Provident Fund
The 15-year Public Provident Fund offers an interest rate of 7.1 per cent to its investors. What makes it even more attractive is the fact that the interest earned is tax free in the hands of investors. Apart from this, the investment offers tax benefit of Rs 1.5 lakhs under Sec80C of the Income Tax Act.
Since these are a part of the post office schemes, that are guaranteed by the Government of India. The interest on the PPF, which is currently 7.1 per cent per annum, can change as decided by the Government. The one drawback is that the scheme has a long tenure of 15 years, though it can be encashed earlier. A good, safe, high interest scheme that can generate returns for individuals who are planning a retirement corpus.
This is a slightly different deposit in the sense that it is not a government of India backed scheme, but, a fixed deposit that is guaranteed by the Government of Kerala.
Since this is a government of Kerala owned entity the deposits up to Rs 4,500 crores along with interest is guaranteed by the State Government of Kerala.
The interest rates offered by the company is 8 per cent on a 1, 2 and 3 year deposit. Senior citizens are entitled to a slightly higher interest rate of 8.25 per cent for a 1, 2 and 3 year tenure. Individuals can choose either the cumulative scheme or the regular interest payment option.
A pretty decent interest rate for a state government backed company.
Senior citizens savings scheme
The senior citizens saving scheme offers an interest rate of 7.4 per cent per annum and the interest is payable every quarter on March 31, June 30, Sept 30 and Dec 31 every year. This is a good scheme and is restricted only for senior citizens. An individual who is 55 years of age can open the account.
An individual of the age of 55 years or more but less than 60 years who has retired on superannuation or under VRS can also open account subject to the condition that the account is opened within one month of receipt of retirement benefits and amount should not exceed the amount of retirement benefits. The maximum amount that is permitted under the scheme is Rs 15 lakhs. This has been enhanced over the years.
Sukanya Samriddhi Account
The Sukanya Samriddhi Account can be opened only in the name of a girl child, who is less than 10 years old. The guardian can open only one account in the name of one girl child and a maximum of two accounts in the name of two different Girl children.. The interest offered at the moment is 7.6 per cent per annum. This fund is largely meant to generate a corpus for the girl child.
Partial withdrawal, maximum up to 50% of balance standing at the end of the preceding financial year can be taken after Account holder's attaining age of 18 years. Account can be closed after completion of 21 years.