Launch of 10-Year National Savings Certificate

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The 10 year national savings certificates were launched by the Union Ministry of Finance. The decision to introduce the certificates was taken by the central government following suggestions from the Committee for Comprehensive Review of National Small Savings Fund (NSSF).

The committee was headed by Shyamala Gopinath, who has operated as a Deputy Governor of the Reserve Bank of India. The certificates were to be made active on December 1, 2011.

The Union government decided to increase the maturity period of the NSCs after recommendations made by the Committee for Comprehensive Review of National Small Savings Fund (NSSF).

Features of 10-Year National Savings Certificate

Following are some features of the 10-Year National Savings Certificates:

  • The savings certificates will have an interest of 8.7 percent per annum. The interest will be compounded after every 6 months.
  • The certificates do not have any upper limit when it comes to investments.
  • For every 100 rupees invested the depositor will receive INR 234.35 after the certificates matures.
  • The certificate can be used as a security.
  • The NSCs can be transferred from one post office to another.
  • The certificate will be provided in denominations of INR 100, INR 5000, INR 500, INR 10000 and INR 5000.

10-Year National Savings Certificate - Implications for Investors

The savings certificates are expected to be really helpful for the investors who have been looking for risk free returns from securities being offered by the national government.

The maturity period of these bonds is 6 years and these will qualify for tax relief in case the investment is in excess of 1 lakh rupees. The facility will be provided as per Section 80C of the Income Tax Act, 1961.

These certificates will also provide investors good returns with high levels of safety as they are supported by the Indian government.

The NSCs are being touted as good investment options for all classes of investors - salaried employees, government workers, and businessmen. Holders can transfer these certificates after paying a nominal fee.

These NSCs offer returns that are 50 percentage points than the 10 year security instruments being issued by the government. However, it is among the investment options that offer lesser interest compared to the bank deposits that have similar maturity.

Notifications regarding interest rates for every year will be provided prior to April 1 in that particular fiscal.

(Last Updated on 2/13/2012)

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