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Unit 5: Investment Vehicles

Institutional Investment in Small Savings Schemes Notes

These schemes being primarily meant for small urban and rural investors; institutions are not
eligible to invest in major small savings schemes.

N.R.Is’ Investment in Small Savings Schemes

The Non-Resident Indians (NRIs.) are not eligible to invest in small savings schemes including
Public Provident Fund (PPF) and Deposit Schemes for Retiring Employees.

Current Small Savings Scheme

1. Post Office Savings Account
Who can Open?
(i) A single adult or two-three adults jointly,
(ii) A pensioner to receive/credit his monthly pension,

(iii) Group Accounts by Provident Fund, Superannuation Fund or Gratuity Fund, Public
Account by a local authority/body,
(iv) An employee, contractor, or agent of a government or of a government company or
of a university for depositing security amounts,
(v) A Gazetted Officer or an officer of a government company or corporation or Reserve
Bank of India or of a local authority in his official capacity.
(vi) A cooperative society or a cooperative bank for payment of pay, leave salary, pension
contribution of government servants on deputation with such society or bank.

Where can it be opened?
At any post office.
Deposits
Account can be opened with a minimum of ` 200with no maximum limit.

Maturity Period/Withdrawl
Withdrawals: The deposited amount is repayable after expiry of the period for which it is
made viz: 1 year, 2 years, 3 years or 5 years.

Interest
Interest, ‘calculated on quarterly compounding basis’, is payable annually.
Interest rates applicable w.e.f. the 1st day of March, 2003 are:
Period of deposit Rate of Interest per cent/ per annum

1 YEAR 6.25
2 YEARS 6.50
3 YEARS 7.25
5 YEARS 7.50
Pass Book
Depositor is provided with a pass book with entries of all transactions duly stamped by
the post Office.

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