With the dip in the rates of bank and corporate deposits, investors are opting for government-sponsored small saving schemes. Government of India bonds, National Saving Certificate, and Kisan Vikas Patra are some of the schemes that have a government backing. Retired people too are showing interest in the government-backed Senior Citizen Saving Scheme.

Sundararajan, investment consultant of Trendy Investments said these small saving schemes had been neglected by people for quite a sometime. But, with a dip in the deposit rates in banks, there has been a rejuvenated interest towards government-sponsored schemes.
 

Even corporate deposits, which used to yield better interest than bank deposits, have seen a slash in the rates. Some companies have stopped accepting deposits. After an improvement in liquidity in the banking system, banks have started slashing rates. Experts believe that people have started realising the importance of ‘safe money’ and hence have started investing in government bonds. This is the case, especially with senior citizens. The uncertainties in the economy may be the reason behind people opting for ‘safer’ route. 

The Senior Citizen Saving Scheme has a higher interest rate of 9%, thus attracting a lot of retirees. This scheme was launched in 2004, because of the complaints from the senior citizens about banks’ low interest rates. Many banks, at present, are offering 7-8% rates on fixed deposits. Retirees would obviously opt for senior citizen’s scheme because of the extra percent or two higher interest rate.  

Experts feel these government-backed schemes are here to stay for quite some time as banks are not likely to up the rates soon.