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Small saving schemes that remain attractive despite the interest rate cut

Senior Citizens Savings Scheme, Sukanya Samriddhi Yojana and PPF continue to be attractive

small savings schemes
Public Provident Fund (PPF), which will offer a tax-free interest rate of 7.9 per cent, will continue to be used by investors to make the debt allocation in their retirement portfolio

The government reduced interest rates on small savings schemes (barring savings deposits) by 10 basis points last week. Senior citizens and other conservative investors, who flock to these instruments for sovereign guarantee, should stick to the more attractive small savings instruments, despite the cut. Interest rates of small savings schemes are linked to the yields on government bonds of a similar maturity (though the government exercises considerable discretion in deciding them). During the April-June quarter, the 10-year G-Sec yield fell by about 40 basis points. The Reserve of ...