Power your portfolio with high potential stocks

Subscription copy of RAJESH BHUTRA [rajeshbhutra@ymail.com]. Redistribution prohibited.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
The equity market in India has presented investors with the right environment
to create wealth. Investors are upbeat and are looking to identify dependable
ways to reach their long term financial goals. Which leads to one big question.
There is no guarantee of returns/ income generation in the Scheme. Further, there is no assurance of any capital protection/capital
guarantee to the investors in the Scheme. ^Investors should consult their financial advisors if in doubt about whether the product is
suitable for them. Note: Risk may be represented as: (Blue): Investors understand that their principal will be at low risk
(Yellow): Investors understand that their principal will be at medium risk (Brown): Investors understand that their principal will be
at high risk
Now is the time to strengthen your investment portfolio. Consider an equity
mutual fund scheme that aims to discover the right opportunities that deliver
growth to your portfolio.
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Consider this scheme if you believe in investing for the long term.
So what do I do with my money?
DSP BLACKROCK EQUITY FUND
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This Scheme is suitable for
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Investment in equity and
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High Risk (Brown)
HOW CAN I POWER MY INVESTMENT
PORTFOLIO WITH HIGH POTENTIAL STOCKS?
Speak to your investment advisor, or visit dspblackrock.com/equity for more.

Savings &
Investment
Yearbook
2015-16

Eighth Edition : June 2015
Seventh Edition : December 2014
Sixth Edition : August 2014
Fifth Edition : April 2014
Fourth Edition : April 2013
Third Edition : April 2012
Second Edition : January 2012
First Edition : November 2011
Date of Eighth Edition Publication: June 1, 2015
Copyright © Value Research India Pvt. Ltd, New Delhi
All Rights Reserved
ISBN No. 978-93-83177-06-6
Published by Value Research India Private Ltd.
5, Commercial Complex, Chitra Vihar, Delhi-110092
PRINTED AT: OPTIONS PRINTOFAST, DELHI-110092
No Part of this book may be reproduced, stored in a retrieval system or transmitted in any
form or means electronic, mechanical or photocopying, recording or otherwise without
the permission of Value Research India Pvt. Ltd., New Delhi. Extracts with images are per-
mitted for book review only. The structure, outline, approach, content, framework and
materials in this publication shall be and remain (along with all intellectual property
rights therein or thereto) to the exclusive property of Value Research India Pvt. Ltd. Every
effort is made to provide accurate and up-to-date information in this publication as far
as possible; we would appreciate if readers would call our attention to any errors that
may occur. Some details, such as terms and conditions in respect to product features,
are liable to change. The publishers cannot accept responsibility for any consequences
arising from the use of information provided in this book. However, we would be happy to
receive suggestions and corrections to be incorporated in the next edition. Please write
to: The Editor, Value Research India Pvt. Ltd., 5, Commercial Complex, Chitra Vihar,
Delhi-110092 or SIYB@valueresearch.in
Editorial
Editorial Update: Sanvee Jalan
Design: Mukul Ojha
Production
Hira Lal

Preface
Dear Reader,
Knowledge is power, and nowhere is this truer than in
personal savings and investments. Those who know more
about various savings and investments options are
consistently able to earn more as well as keep their
investments safer.
All of us are often too busy to find out even the basic facts
about the various savings options that are available. As a
result, we often find ourselves at a disadvantage when it
comes to making decisions about our money. The goal of this
book is to destroy that disadvantage and give the advantage to
you. In one easy-to-read package it gives you the information
that you will need to choose the options that are most suitable
for you, and also enable you to ask the right questions when
someone is selling you a financial product.
For over two decades, Value Research has been on a quest
to make savings and investments simple, easy, interesting
and accessible. This book is the latest addition to our range
of publications. We hope that it will empower you to take
charge of your investments and also enable you to make the
choices that are best for you and your family.
Live Long and Prosper
Dhirendra Kumar
Value Research

Contents
SAVINGS AND INVESTMENT
1 Savings Bank Account 5
2 Bank Fixed Deposit 15
3 Company Deposits 23
4 Bank Recurring Deposit 29
5 Post Office Recurring Deposit 35
6 Post Office Term Deposit 41
7 Public Provident Fund 47
8 National Savings Certificate 55
9 Kisan Vikas Patra 61
10 Sukanya Samriddhi Yojana 67
11 Senior Citizen Savings Scheme 73
12 Post Office Monthly 79
Income Scheme
13 RBI Savings Bond 85
14 Capital Gain Tax Exemption 91
Bond or 54 EC Bonds
15 Rajiv Gandhi Equity Savings 97
Scheme
16 Inflation Indexed Bonds 103
17 Mutual Funds 111
18 Stocks and Equity 125
19 National Pension System 131
20 Unit Linked Insurance Plans 143
PROTECTION
21 Health Insurance 151
22 Life Insurance 161
23 Annuity 171
INCOME TAX
24 Income Tax Planning 177
25 Tax Planning Strategies 197
ANNEXURE AND RESOURCES 207
Value Research Online 215

Savings & Investment Yearbook 1
Introduction
When it comes to handling money, you will end up either
the victor or the victim; there is no middle ground. The
biggest problem with money is that it doesn’t come with an
instruction book. The result: many financial decisions that
you make to save and invest end up eroding your personal
and potential wealth. We live in an environment where
choice rules and whether you are a do-it-yourself investor, a
money neophyte or someone who is in the business of
advising on financial products, you need to be aware of
various savings and investment options available. In such
situations, knowledge is your first line of defence.
After all, what happens to you financially is what you
know and do, or, by default, what you don’t know and
therefore can’t do. Real financial power is created by

knowing about financial products: what they are, what they are
meant for, how they work and how you can gain from them. The
Value Research Savings and Investment Yearbook 2015-16 is the
roadmap to making informed choice to save and invest. This
Savings and Investment Yearbook consists of an easy-to-read
listing of various types of savings and investment instruments
that a typical investor is likely to invest in.
This book does not offer tips on investments that will double
your money or guarantee astounding returns. As you would
know, nobody can make such promises with any certainty.
Written in a simple language, this handbook brings together
resources and information on the various savings and
investment options available, highlighting the factors that you
should look out for before making any investment decision. As
each product has unique features, common investor concerns
such as risks, safety, guarantees, key benefits, minimum
investments and lock-in are addressed in detail. We tell you
ways to buy, the various tax implications and suitability besides
tips and strategies to make the most of each featured product.
The information in this book can be the building block in the
creation of a secure and comfortable financial future for you.
The product details will make you financially unstoppable—a
real pro at winning the fight against financial freedom. The
purpose of this book is not to provide advice but to present
information which will help and empower you with investment
decisions. Once you have gone through the details for each
financial instrument, the book leads you to plan your taxes and
also helps you with various strategies that you can adopt to
optimise your tax liabilities.
As this book is intended to be a living document, it will be
updated as the market and regulatory environment continues to
evolve and change.
In the Union Budget, the Finance Minister introduced the
Atal Pension Yojana, Sukanya Samriddhi Yojana and an
Introduction
Savings & Investment Yearbook2

Introduction
additional tax exemption of up to `50,000 under Section 80CCD
for the National Pension System. This version of the Yearbook is
updated with all the changes.
We have added information on new products: inflation-
indexed bonds or inflation-indexed National Savings Securities-
Cumulative (IINSS-C), the reintroduced Kisan Vikas Patra and
infrastructure bonds, which offered tax benefits under Section
80CCF. We have retained the product snapshot in the Annexure.
You don’t need to be an expert or have financial
qualifications to manage your own money because you already
have all you need: a desire to know and a book to lead the way.
We hope the Value Research Savings and Investment Yearbook
will give you the tools and information you need to achieve
your savings and investment goals throughout your life. Read
on. Savings and Investing can be profitable and fun.

Savings Bank
Account
You probably have a savings bank account,
but chances are you have not given much
thought to the impact banking has on your
finances. Being knowledgeable about
different types of savings bank accounts
can save you money.
1

It’s hard to get by without a bank account these days. Banks are
essential to making the economy work. Banks offer loans that you
can use to buy a house or a car, they issue debit cards that you
can use to buy goods you want to buy. You may not have realised,
though, that you can also save money by banking smartly. This
chapter will describe the several savings bank options that are
available.
A bank account is a financial account with a banking
institution, recording the financial transactions between you (the
account holder) and the bank. The purpose of a bank account is
to encourage savings and bring financial transactions into the
banking network. There are several types of bank accounts that
you can opt for depending on your needs; for instance, a
businessman will prefer a current account compared to a salaried
individual who will need a savings bank account.
Savings Bank Account
Savings bank accounts are meant to promote the habit of saving
among people while allowing them to use their funds when
required. The main advantage of a savings bank account is its
high liquidity, safety and a moderate interest on the savings.
Capital Protection
The capital in a savings bank account is not completely safe.
Balance in the account including interest earned, is insured up to
a maximum of `1 lakh. This sum is insured by the Deposit
Investment Objective and Risks
The savings bank account is the traditional home for cash
savings. Today, a savings bank account is a necessity and is
an essential component of an individual’s finances. The most
important reason to open an account is the automatic access
that it offers to other financial instruments such as
investments, loans and savings. The savings bank account
offers several other facilities and features that one should
explore to make optimum use of cash flows.

Features
ELIGIBILITY
You nneed tto bbe aa RResident IIndian
ENTRY AGE
No aage iis sspecified aand mminors ccan oopen aan aaccount wwith tthe nnatural gguardian
operating iit
Minors aabove aage 110 ccan ooperate tthe aaccount oon ttheir oown
ACCOUNT OPENING FEE
No ffees, bbut aa mminimum ccash ddeposit iis rrequired tto oopen aan aaccount
ACCOUNT MAINTENANCE AND CHARGES
Minimum bbalance rrequired ddepending oon aaccount llocation wwhich ccould bbe
urban, ssemi-uurban oor rrural
Minimum bbalance rrequired ddepending oon aaccount ttype ssuch aas nno-ffrills,
savings, ssalary-llinked, ddeposit-llinked
Predefined nnumber oof ttransactions pper mmonth aare ffree, bbeyond wwhich
transactions aare ccharged ffor
INTEREST
Fixed rrate ccompounded hhalf yyearly uup tto `1 llakh, wwith aa mminimum 44 pper ccent aat
the mmoment, tthough ssome bbanks ooffer aa hhigher rrate tthan tthis
Variable iinterest rrate oon tthe bbalance aabove `1 llakh iin tthe aaccount
The iinterest iis ccalculated oon aa ddaily bbalance mmethod
OTHER FEATURES OFFERED
Cheque bbook ffacility, AATM ccum ddebit ccard, AAccess tto llocker ((fee ccharged bbased
on llocker ssize), IInternet bbanking, PPhone bbanking, MMobile bbanking
TENURE
As llong aas tthe aaccount iis aactive
ACCOUNT HOLDING CATEGORIES
Individual, JJoint, HHindu UUndivided FFamilies ((HUF) nnot eengaged iin aany ttrading oor
business aactivity, MMinor tthrough tthe gguardian
NOMINATION
Facility iis aavailable

Insurance and Credit Guarantee Corporation (DICGC) for all
commercial banks, including the branches of foreign banks
functioning in India, local area banks and regional rural banks. In
case of co-operative banks, you will need to check if it is covered
under the DICGC because if a bank has not been paying the
premium for the insurance scheme for three consecutive years, it
ceases to be insured.
Inflation Protection
A savings bank account does not provide protection against
inflation, which means whenever inflation is above the rate that
a savings bank account earns; the account earns no real returns.
Guarantees
The interest rate in a savings bank is guaranteed up to the first
`1 lakh balance in the account. This rate varies across banks
since the Reserve Bank of India deregulated the savings bank
deposit interest rate on October 25, 2011. Banks are now free to
determine the interest on the balance in a savings bank account,
which has to be uniform for all types of accounts up to `1 lakh in
an account but varies for accounts with a higher balance.
Liquidity
The savings bank account is highly liquid and one can withdraw
cash from one’s account from the branch during the banking
hours. Today, the automated teller machine (ATM) access is
offered by most banks to savings bank account holders. The ATM
allows 24-hour withdrawals within limits in a single day which
varies across banks and also depending on the account type.
When settling payments through real time gross settlement
(RTGS) feature; transactions are possible from 9.00 AM to 4.30
PM on weekdays and from 9.00 AM to 1.30 PM on Saturdays for
real time settlement.

Exit Option
You can close the account on any day within the banking hours.
Other risks
Balance, including interest in an account above `1 lakh, is
exposed to the risk of a bank folding up.
Credit Rating
Opening a savings bank account does not entail credit rating.
Tax Implications
Interest earned in the savings bank account up to `10,000 per
annum is tax exempt under section Section80TTA since 2012-13.
This section allows an income tax deduction to an individual or
a HUF for interest earned on the savings bank account held with
a Bank, Post Office or a Society. Interest amount above this limit
is treated as income and taxed accordingly. The interest earned is
taxable under the head ‘Income from other sources’.
Is online banking safe?
Online banking takes security very seriously and uses encryption
technology to protect account holders from hackers and other
security risks. However, you should not take the bank’s word for
it blindly; explore your bank’s website and look for the security
provisions it offers. Online banking works on passwords and the
onus of safety partly rests with you.
Is online banking for you?
It’s most beneficial if:
You are wired with online access
You make a lot of bill payments each month; online banking
None of the public sector banks have folded up in India, which is not
the case for co-operative banks. Make sure you are choosing a bank
which has strong credentials and is safe.

can save you time writing out
cheques and associated costs
You can track your expenses
and manage your finances
efficiently
How does it work?
Websites differ across banks, but
managing your finances online
should be as simple as logging on
to the bank’s website and
entering you user ID and
password to get started. The site
will then guide you through
actions you seek to perform, be it
viewing the transaction history of
your account, request for a
cheque book, account
statements, stop payment
requests or for any other banking
facility that you need.
Banking on the move
The advent of mobile telephony
has touched our lives like never
before. Today, banks are making it easier than ever for account
holders to access account information on their mobile devices.
Some banks are offering new services or improving existing ones
that allow people to access their accounts while on the go.
You access your bank account through your registered mobile
phone with your bank. The features offered in mobile banking are
of two types; one-way, where your bank sends you mobile
updates; the other which is a two-way service where you send a
request, which the bank acknowledges.
With evolving technology and improving mobile handsets,
GOING ONLINE
It goes by many names, such
as: online banking, Internet
banking, PC banking and
electronic banking. Most
banks today offer online
banking, allowing you to
access your account online
which is convenient and
allows you to control your
account from anywhere.
Online banking permits you
to pay bills online, transfer
money between accounts,
online shopping, and access
account information at any
time and manage different
types of accounts with a
particular bank.
Online banking opens a new
window to your finances; you
can invest in stocks, buy
insurance, pay renewal
premiums, and recharge
your mobile phone, pay
credit card bills and even
pay taxes depending on
the facilities offered by
your bank.

banks are creating software for mobile banking interface, opening
yet another window to banking. With inter-bank mobile payment
services (IMPS), you can transfer funds from your account to
another account using your mobile phone if the account where
money is being transferred is also IMPS enabled. Currently, IMPS
transaction is limited to `50,000 per day per account.
How IMPS Works to transfer funds
Register your bank account with your bank for mobile banking
services
Get the mobile personal identification number (MPIN) and
mobile money identity number (MMID) from your bank
Download and activate the mobile application on your phone
Get the MMID and MPIN of the person to whom you wish to
transfer funds
Use the mobile banking menu to transfer funds
Check the sms (short message service) on your mobile phone
confirming debit to your account
How IMPS Works to receive funds
Register your bank account with your bank for mobile banking
Get the MMID from your bank
Share the MMID and your mobile number with the remitter
Check sms confirming credit to your account
Various types of Savings Bank Account on Offer
No Frills
This account is aimed at those with limited cashflows
This account allows you to bank with a zero minimum balance
If the balance in this account exceeds `50,000 or if the cumulative
value of credit transactions exceeds `1 lakh in any financial year, the
account will no longer be treated as ‘No Frills’. The account will be
required to satisfy the conditions and criteria applicable for a regular
savings account and be subject to relevant charges.

There is stipulation on minimum or average balance
Salary Account
This account is offered to all salaried employees of companies
banking with a particular bank
The account comes with concessions on maintaining minimum
balance, number of withdrawals, additional cheque book
facility and other features including free ATM cum debit card
in most instances
One can issue multi-city cheques at no additional costs
Sweep-in or Multiplier Account
This account provides the liquidity of a savings account
coupled with high interest earnings of a fixed deposit which is
achieved through a fixed-deposit linked to the savings account
The balance in this account is never idle. Fixed deposit(s) from
the surplus funds in your savings bank account subject to a
minimum balance as stipulated by a bank is created in
multiples of sums stipulated by the bank for tenure of one year
or more as instructed and provides maximum returns
The account also provides maximum liquidity. All linked fixed
deposits are enabled for automatic reverse sweep in multiples
as stipulated by the particular bank on a last-in-first-out (LIFO)
basis when the balance in the savings account falls below the
specified minimum sum. This way the amount that is reversed
earns interest rates applicable for the period that the deposit
was held with the bank
Miscellaneous Accounts
Banks have created accounts to cater to different target groups by
bundling features that are addressed to such groups:
Features vary across banks and also depend on the bank’s
relationship with the corporate client. Service tax @ 14 per cent is
applicable on facilities offered with this account.

Privilege banking: offers additional services for a fee or on
maintaining higher minimum balance
Children’s Account: targeted at children, they can operate this
account based on pre-set conditions by the parent or guardian
Account for Women: Targeted at women with special features
such as privilege cards and special discounts
Senior Citizen Account: Aimed at those above 60 years, the
account offers access to special counters in the bank branch
besides additional interest on deposits and low or no minimum
balance maintenance requirements
Where to open an Account
You can open an account at any nationalised, private sector or
foreign bank.
How to open an Account
Once you have selected the bank to open an account you will
need the following documents:
An account opening form which the bank will provide
Two passport size photographs
Address and identity proof such as copy of the passport, PAN
(permanent account number) card or declaration in form No 60
or 61 as per the Income Tax Act 1961, driving license, voter’s ID
or ration card
Carry original identity proof for verification at the time of
account opening
These days, you can also also open an online account without
visiting the bank branch
How to operate an Account?
You need a pay-in slip with the initial account opening sum to
be credited into your account
The savings bank rules can be read in the passbook.

You get a saving bank passbook with your photo affixed
stating the nominee. However, some banks, especially private
and foreign banks do not issue a passbook and instead deliver
an account statement
Types of Transactions
Cash, Cheque, Demand draft, Money transfer and ECS
Points to Ponder
Penalties when the balance falls below the minimum
stipulated sum
Penalty when cheques are returned
Collection facilities offered and applicable charges
Details of charges, if any for issue of cheque books and limits
fixed on number of withdrawals and cash drawings
The joint account holders can give any of the following mandates for
the disposal of balance, which can be modified by the consent of all
the account holders
Either or Survivor: If the account is held by two individuals say, A
and B, the final balance along with applicable interest will be paid
to the survivor on death of any one of the account holders.
Anyone or Survivor(s): If the account is held by more than two
individuals say, A, B and C, the final balance along with interest,
if applicable, will be paid to the survivor on death of any
two account holders.
TIPS AND STRATEGIES
Search for a savings bank account with this criterion:
The bank offers different types of savings accounts
The bank provides free debit card with no annual fees
The bank insures the savings bank account
The bank offers payable-at-par cheques all over India

Bank Fixed
Deposit
Robert Louis Stevenson said; “Don’t judge
each day by the harvest you reap but by the
seeds that you plant.” A bank deposit is
similar to sowing seeds. You park a sum in
an account which earns you an interest for
the time that the amount sits in the
account, growing at a faster pace than what
it would have in an ordinary savings bank
account.
2

A bank fixed deposit is also known as term deposit, which can
be opened by account holders to earn better interest compared
to the interest that the account balance earns in a savings bank
account. This is a type of instrument in which a certain sum of
money is placed with the bank for a specified time period at a
fixed interest rate.
The interest rates offered by banks on such deposits depend
on the number of days, weeks or months for which the deposit
is maintained. There is great flexibility in the maturity period
which ranges from 15 days to 10 years. The interest is higher in
case of longer maturity periods and can be compounded
quarterly, half-yearly or annually and varies across banks. The
main draw for such deposits is the guaranteed higher interest
that deposits earn.
Capital Protection
The capital in a bank deposit is not fully protected. Till recently,
all bank deposits were insured under the Deposit Insurance and
Credit Guarantee Scheme of India, which now has been made
optional exposing the deposits to risks if the bank is not
insuring deposits.
The deposit is not inflation protected, which means whenever
inflation is above the deposit interest rate; the deposit earns no
real returns. However, when the interest rate is higher than
inflation rate, it does manage a positive real rate of return.
Bank Fixed Deposit
The prime objective of the bank deposit is to earn better
interest on savings compared to what an ordinary savings
bank offers. Such deposits are preferred by risk-averse
investors, who find the guaranteed fixed returns extremely
reassuring to invest in.

Bank Fixed Deposit
Features
ELIGIBILITY
You nneed tto bbe aa RResident IIndian wwith aa ssavings bbank aaccount
ENTRY AGE
You nneed tto bbe oover 118 yyears oold
Minors ccan oopen aa ddeposit wwith tthe nnatural gguardian ooperating iit
INVESTMENTS
Minimum: `1,000 pper aannum
Maximum: NNo llimit
Deposits aabove `15 llakh qqualify ffor sspecial iinterest rrates
INTEREST
Depends oon ttenure oof tthe ddeposit ((See ttable ffor ccurrent rrates)
Currently sstarts ffrom 77.50 pper ccent tto 99.25 pper ccent pper aannum
TENURE
Currently ooffered uup tto tten yyears
Individual
Joint
Hindu UUndivided FFamilies ((HUF) nnot eengaged iin aany ttrading oor bbusiness aactivity
Companies oor AAssociations oor TTrust
Minor tthrough tthe gguardian
NOMINATION

Guarantees
The interest rate is fixed and guaranteed for the duration of the
deposit at the commencement of the deposit.
Liquidity
The bank deposit is liquid, despite the lock-in during the tenure
of the deposit. The liquidity is offered in the form of loans and
withdrawals subject to conditions.
Credit Rating
Bank deposits do not carry any credit rating.
Exit Option
Early closure of a deposit is permitted with a penalty.
Other risks
Interest rate changes pose risks to existing deposit holders;
for instance, you may have locked-in at a lower interest rate
but due to economic factors; the bank starts to offer a higher
rate on deposits later.
If the bank where you have the deposit does not have deposit
insurance and credit guarantee, you run the risk of losing the
capital and the interest.
Tax Implications
The amount invested in deposits with a maturity period of 5 years
in a scheduled bank is eligible for tax deduction under Section
80C. However, the interest earned on the deposit is taxable.
Bank Fixed Deposit
Loan on the deposit up to 75-90 per cent of the deposit
amount is available from banks against the fixed deposit
receipt. Though the interest charged on the loan will be
marginally higher than the interest earned by the deposit.
The deposit can be closed prematurely at the cost of losing
the interest it earns.

Various Types of Bank Fixed Deposits
Fixed deposit
In this type of deposit both the tenure and the interest rate for
the tenure are fixed
Recurring deposit
In this type of deposit, bank
account holders deposit equal
amount of money every month
The interest rate is fixed for
the deposit tenure and so is
the number of monthly
instalments
Security deposit
A few corporate organisations
stipulate new employees to
provide security deposit to check
attrition.
This deposit is made by an
employee and he cannot
withdraw such fixed deposits
without the consent of the
employer
The company has the right to
the FD in case an employee
leaves the organisation before a
certain stipulated period
Bank Fixed Deposit
GOING ONLINE
Having an online banking
user and password is like
having the key to several
doors. One such door is the
ability to open a hassle free
fixed deposit from the
comfort of your home or
office or for that matter
anywhere as long as you
have access to net banking.
You can seamlessly transfer
funds from your savings
account to higher interest
earning fixed deposits.
Flexibility in deciding the
amount, tenure, interest
payment and maturity of
your deposit
At the time of maturity, the
balance automatically
transfers to your bank
account
As per the term deposit scheme 2006, issued by the Central
Government of India, the 5-year tax savings fixed deposit scheme will
not have the following facilities: premature withdrawal, loan against
fixed deposit and auto-renewal facility.

Tax-saver fixed deposit
5-year lock-in deposits have tax benefits under Section 80C
Where to Open a Deposit
You can open a deposit at any nationalised, private sector or
foreign bank
How to Open a Deposit
Select the bank branch to open the deposit
Choose a nominee and get a witness signature
Your existing bank account counts as being KYC compliant
How to Operate a Deposit
You can issue a cheque to the bank through your existing
savings bank account to start a deposit
A deposit receipt or certificate is issued with deposit details
Cheque
Money transfer
Electronic clearing service (ECS)
Bank Fixed Deposit
The joint account holders can give any of the following mandates for
the disposal of balance, which can be modified by the consent of all
the account holders.
Either or Survivor: If the account is held by two individuals say, A
and B, the final balance along with applicable interest will be paid
to survivor on death of any one of the account holders.
Anyone or Survivor(s): If the account is held by more than two
individuals say, A, B and C, the final balance along with interest,
if applicable, will be paid to the survivor on death of any two
account holders.

Bank Fixed Deposit
TIPS AND STRATEGIES
Check interest rates offered by different banks for dif-
ferent tenures
Instead of a large deposit, split the amount into 3-5
deposits to reduce impact of interest loss in case of
premature withdrawal
Do not leave the renewal column unfilled; else on
maturity a fresh fixed deposit tenure will commence
Ascertain the upward or downward interest rate trends
before locking in to a deposit
Points to Ponder
Minimum sum to start a deposit
Penal provisions in case of partial or early foreclosure
Interest Rates for Term Deposits below `1 crore
Maturity Period General Senior Citizen*
7 days to 45 days 6.00% 6.25%
46 days to 179 days 7.00% 7.25%
180 days to 210 days 7.25% 7.50%
211 days to less than 1 year 7.50% 7.75%
1 year to 455 days 8.00% 8.25%
456 days to less than 2 years 8.25% 8.50%
2 years to less than 3 years 8.25% 8.50%
5 years and up to 10 years 8.00% 8.25%
Rates of Interest (% p.a.) w.e.f May 11, 2015
*Interest rates for senior citizens
Source: https://www.sbi.co.in/user.htm

Company
Deposits
Someone said, a rupee saved is a rupee
earned. He could not have been wiser.
Deposits earn interest and grow the
deposited rupee over a period of time to a
value far more than the initial deposit.
3

Like bank fixed deposits, company fixed deposit is a deposit
with financial institutions and non-banking finance companies
(NBFC) for a fixed rate of return over a fixed tenure. The rate of
interest depends on the maturity tenure and these deposits are
governed by Section 58A of the Companies Act.
Capital Protection
The capital in the company fixed deposit is not protected
because these are not secured like most bank deposits.
The company deposit is not inflation protected, which means
whenever inflation is above the guaranteed interest rate offered
by the deposit; the deposit earns no real returns. However,
when the interest rate is higher than inflation rate, it does
manage a positive real rate of return.
Guarantees
The interest rate on the company deposit is guaranteed as long
as the company can manage to pay the depositors. However,
company deposits are known to be delayed and at times default
on payments.
Liquidity
The company deposit is liquid, despite the stipulated lock-in
that deposits have. The liquidity is offered in the form of
withdrawals subject to conditions.
Company Deposits
The prime objective of investing in company deposits is to
earn a higher interest rate compared to bank fixed deposits.
They are a good source of regular income by means of
monthly, quarterly, half-yearly, or yearly interest incomes.

Company Deposits
Features
ELIGIBILITY
Resident IIndians
ENTRY AGE
18 yyears oor oolder
Minors ccan oopen aan aaccount wwith tthe nnatural gguardian ooperating iit
INVESTMENTS
Minimum: `1,000 pper aannum
Maximum: NNo llimit
INTEREST
Depends oon ttenure oof tthe ddeposit aand tthe iissuer
Individual
Joint
As sspecified bby tthe iissuer
NOMINATION

Credit Rating
A company deposit has to have a credit rating, which they can
obtain from any of the credit rating agencies such as CRISIL,
CARE or ICRA.
Exit Option
Premature encashment of the deposit is permissible.
Other risks
Savings in this product are risky because deposits are not
secured.
Tax Implications
The sum invested in a company deposit or the interest that it
earns is not eligible for any tax concessions. The interest earned
on a deposit on a yearly basis is added to the total income under
the head ‘Income from other sources’ and taxed accordingly.
Going Online
Most company deposits are offered offline, unless it is being
sold online through a broking account.
Where to open a Deposit
Deposits can be made directly with the companies offering the
deposit or distributors selling the same.
Company Deposits
If a lender such as a bank or NBFC is willing to accept the company
deposit as collateral; you can pledge the deposit to obtain loans,
the amount and rate at which the loan is permitted depends on the
lending institution.
A company deposit can be prematurely encashed and each
company deposit has different charges on exit that is governed by
the time that the deposit has been held for.

How to Buy
Once you have decided on the sum that you wish to invest and
the tenure:
You need to fill the deposit application form available with
the company
buying
You can invest in deposits with cash, cheque or demand draft
drawn in favour of the company or the specified entity
Points to Ponder
Company deposits are risky
TDS is applicable only when interest is above `5,000 in a
financial year
Interest income is available in monthly, quarterly, half-
yearly, or yearly frequencies
The recourse in case of delays or defaults are not very tight or
regulated
Company Deposits
In case of default by a company, the investor cannot sell the
deposit documents to recover his investment.
The investor has no claim over the assets of the company in case
the company is wound-up. This makes a company fixed deposit a
risky option to invest in.
To spread the risk of holding company deposits, make deposits with
different companies for different tenures to minimise risks.

Company Deposits
TIPS AND STRATEGIES
The assured return on company deposit, like any other
deposit, can be used to create an income ladder.
Certificates can be bought every month or quarter for
appropriate denominations, which on maturity will act
as a steady income stream
To spread the risk of holding company deposits, make
deposits with different companies for different tenures
to minimise risks

Bank
Recurring
Deposit
Albert Einstein once said, “The most
powerful force in the universe is compound
interest.” When someone as brilliant as him
talks about the power of compounding, one
tends to listen! Recurring deposit offers
compounding; the fact that interest
increases the value of interest as well as
the value of principal.
4

A bank recurring deposit (RD) is a type of deposit wherein one
saves predefined sums of money every month in an account for
a fixed tenure. The committed monthly investment earns a
higher interest compared to savings bank account. The
recurring deposit provides an element of compulsive savings at
a higher interest rate depending on the tenure of the deposit.
The interest rates offered by banks on such deposits depend
on the number of days, weeks or months for which the
recurring deposit is maintained. There is great flexibility in the
maturity period which ranges from 6 months to 10 years. The
interest is higher in case of longer maturity periods, but largely
depends on prevailing interest rates.
Capital Protection
The capital in a recurring deposit is not fully protected. Till
recently, all bank deposits were insured under the Deposit
Insurance and Credit Guarantee Scheme of India, which now
has been made optional exposing the deposits to risks if the
bank is not insuring deposits.
The recurring deposit is not inflation protected, which means
whenever inflation is above the deposit interest rate; the deposit
earns no real returns. However, when the interest rate is higher
than inflation rate, it does manage a positive real rate of return.
Guarantees
The interest rate is fixed and guaranteed for the duration of the
recurring deposit at the commencement of the deposit.
Bank Recurring Deposit
The prime objective of the recurring deposit is to earn better
interest on savings compared to what an ordinary savings
bank offers and instil discipline to save regularly.

Features
ELIGIBILITY
You nneed tto bbe aa RResident IIndian wwith aa ssavings bbank aaccount
ENTRY AGE
You nneed tto bbe oover 118 yyears oold
Minors ccan oopen aa ddeposit wwith tthe nnatural gguardian ooperating iit
INVESTMENTS
Minimum: `100 pper aannum
Maximum: NNo llimit
Senior ccitizens qqualify ffor sspecial iinterest rrates
INTEREST
Depends oon ttenure oof tthe ddeposit ((see ttable ffor ccurrent rrates)
Currently aavailable ffrom 88.25 pper ccent tto 99.25 pper ccent pper aannum
TENURE
Currently ooffered ffor tten yyears
Individual
Joint
Hindu UUndivided FFamilies ((HUF) nnot eengaged iin aany ttrading oor bbusiness aactivity
Companies oor AAssociations oor TTrust
NOMINATION

Liquidity
The recurring deposit is liquid, even if the depositor defaults on
a payment during the account’s tenure. The liquidity is offered
in the form of loans and withdrawals subject to conditions.
Credit Rating
Recurring deposits do not carry any credit rating.
Exit Option
Premature closure of a deposit is permissible with a penalty.
Other risks
Interest rate changes pose
risks to existing deposits; for
instance, you may have
locked-in at a lower interest
rate but due to the economic
factors, the bank starts to offer
a higher rate on deposits later
If the bank where you have
the deposit does not have
deposit insurance and credit
guarantee, you run the risk of
losing the capital and the
interest
A bank has special powers to
end an RD account before its
maturity
Loan up to 90 per cent of the deposit balance is available at the
discretion of the bank at a rate fixed by the bank, which varies from
time to time. The loan interest rate has to be more than the interest
rate on the closed RD account.
The deposit can be closed prematurely at the cost of losing the
interest it earns.
GOING ONLINE
With online banking access,
you can initiate recurring
deposits and regularly save
without any defaults with the
seamless transfer of funds
from your savings account to
the recurring deposit
account.
Flexibility in deciding the
amount, tenure, interest
payment and maturity of
your deposit
At the time of maturity, the
balance automatically
transfers to your bank
account

Tax Implications
There is no tax advantage on these deposits and the interest
earned on maturity is treated as income from other source when
computing income tax. Effective from June 1, 2015, TDS will be
deducted on interest income above `10,000 at 10%.
Where to Open a Deposit
You can open a recurring deposit at any nationalised, private
sector or foreign bank.
How to Open a Deposit
Select the bank branch to open the deposit
Choose a nominee and get a witness signature
Your existing bank account counts as being KYC compliant
You can issue a cheque to the bank through your existing
savings bank account to start a deposit. Future payments can
be instructed through direct debt from your account to the
RD account
A recurring deposit passbook is issued with deposit features
Passbook needs to be updated to track the monthly deposits
Cheque
Money transfer
Points to Ponder
Minimum sum needed to start a deposit
Penal provisions in case of partial or early foreclosure

TIPS AND STRATEGIES
Check the interest rates offered by different banks for
different tenures
Some banks offer flexible or variable recurring
deposits. In these flexible RDs, the person is allowed
to deposit even higher amount of instalments, with a
fixed upper limit
Use direct transfer from your bank account to keep an
RD account active and from missing payments
Before investing in a deposit it is important to consider
the rate of interest and the inflation rate. A high
inflation rate can eat into your real returns. So, it is
vital to have a look at the inflation rate before arriving
at the real rate of interest
Rates for some key tenures
Maturity Period General Senior Citizen*
1 year to 455 days 8.00% 8.25%
456 days to less than 2 years 8.25% 8.50%
5 years and up to 10 years 8.00% 8.25%
**Only Senior Citizens are eligible for higher rates of interest.
Rates of Interest (% p.a.) w.e.f May 11, 2015
Note: Interest rates are subject to periodic changes. The applicable inter-
est rates will be given based on the date and time of receipt of the funds
by the bank.

Post Office
Recurring
Deposit
A mountain is composed of tiny grains of
earth. The ocean is made up of tiny drops of
water. Your regular small savings help you
build a sizeable savings over time. The
postal recurring deposit is an instrument for
the small saver.
5

The Post Office Recurring Deposit (PORD) is a systematic
savings plan, where you save a small but finite equal sum of
money each month for a period of 60 months. The savings in
the PORD earn a fixed interest which can be used to accumulate
a sizeable and predetermined savings over time.
Capital Protection
The capital in the PORD is completely protected as the scheme
is backed by the Government of India with guaranteed returns.
The PORD is not inflation protected. Whenever inflation is
above the guaranteed interest rate; the scheme earns no real
returns. But when the inflation rate is below the guaranteed
rate, it does manage a positive real return.
Guarantees
The interest rate is guaranteed and is currently 8.40 per cent
compounded quarterly. The interest rates on this deposit are
notified every year before April 1, and is aligned with G-Sec
rates of similar maturity, with a spread of 0.25 per cent.
Post Office Recurring Deposit
The main objective of the PORD is to provide an assured
8.40 per cent return compounded quarterly on every monthly
deposit made over 60 months. Though it offers no tax
incentives, it is a preferred instrument amongst small savers
for the government backing that this product offers.
The facility of pledging the deposit in the PORD account to obtain
loans is not permitted as it defeats the purpose of regular savings.
Premature closure of this account is permitted after completion of
three years from the date of opening of the account.
One withdrawal up to 50 per cent of the balance is allowed after
one year.

Features
ELIGIBILITY
You nneed tto bbe aa RResident IIndian ppreferably wwith aa ppost ooffice ssavings aaccount
ENTRY AGE
No aage llimit iis mmentioned
Minors aabove aage 110 yyears ccan oopen aan aaccount iin ttheir oown nname ddirectly
INVESTMENTS
Minimum: `10 oor iin mmultiple oof `5 tthere oof
Maximum: TThere iis nno uupper llimit
INTEREST
8.40 pper ccent ccompounded qquarterly
TENURE
60 mmonths
Individual
Joint
NOMINATION

Liquidity
The PORD is liquid, despite the 60-month stipulated lock-in.
The liquidity is offered in the form of withdrawals subject to
conditions and penalties.
Credit Rating
As the PORD is offered by the Government of India, it does not
require any commercial rating.
Exit Option
Premature closing of the account is permitted with penalty.
Other Risks
There is no risk associated with this investment and it is
completely risk-free.
Tax Implications
There is no tax benefit on the savings or income earned from
this scheme.
You can open the account at any post office.
How to Open an Account
Once you have selected the post office to open the PORD
account, you will first need to open a post office savings
account to link the monthly payment to the PORD and you will
need the following documents:
An account opening form which the post office will provide
(permanent account number) card or declaration in form No 60
or 61 as per the Income Tax Act 1961, driving license, voter’s
identity card or ration card

account opening
Choose a nominee and get a
witness signature to complete
the formalities to start the
deposit
How to Operate the Account?
You need a pay-in slip with the initial account opening sum
to be credited into your account
Payment can be made by cash, cheque or instructions to
transfer it through your post office savings account
Points to Ponder
Portability of the account from one post office to another
Five year tenure of the account
Facility of continuing the recurring deposit for a maximum
period of five years on completion of the first five-year tenure
Accounts with not more than four defaults in deposits can be
regularised within a period of two months on payment of a
default fee
Account becomes discontinued after more than four defaults
Interest income is taxable with no TDS certificate issued
GOING ONLINE
There is no online access to
post office accounts as yet.
The PORD account has a passbook with rules applicable to the
accounts stated in it.

TIPS AND STRATEGIES
To avoid defaults in deposits, link the post office savings
account to the recurring deposit account for standing
transfer instruction to the RD.
Use the advance payment on deposit to gain on
discounts on the recurring deposit sum.
Case 11: In an active account: six or more deposits but
not exceeding eleven deposits made in any calendar
month, fetches `1 rebate on every `10 denomination
recurring deposit.
Case 22: Twelve or more deposits made in any calendar
month, fetches a rebate of `4 for every twelve deposits
and `1 for the balance, if any, of not less than six
deposits.
Full maturity value allowed on the recurring deposit
account restricted to `50 denomination in case of
depositor’s death subject to certain conditions
Automatic credit of monthly interest to saving account
if accounts are at the same post office
Post Office Recurring Deposit over the years
Dec-2011
Maturity Period 2014-2015 2013-2014 2012-2013 Mar-2012
5-year Recurring deposit 8.4 8.3 8.4 8.0
All figures in per cent

Post Office
Term Deposit
The futility to predict is best described by
Peter Drucker, who said; “Trying to predict
the future is like trying to drive down a
country road at night with no lights while
looking out the back window.” Yet
predictability in life, especially with finances
is something that many people look up to.
Many of the financial products available at
the post office provide this predictability
which makes them one of the preferred
products among the small savers.
6

The Post Office Term Deposit (POTD) is similar to a bank fixed
deposit, where you save money for a definite time period
earning a guaranteed return through the tenure of the deposit.
At the end of the deposit’s tenure; the maturity is made up of
the capital deposited and the interest it earns.
Capital Protection
The capital in the POTD is completely protected as the scheme
is backed by the Government of India, making it totally risk-free
with guaranteed returns.
The POTD is not inflation protected, which means whenever
inflation is above the guaranteed interest rate; the return from
the scheme earns no real returns. However, when the inflation
rate is below the guaranteed return, it does manage a positive
real rate of return.
Guarantees
The interest rate on the POTD is guaranteed for the tenure one
opts for which varies from 8.40 per cent for a year to 8.50 per
cent for a five-year deposit. The interest rates on this deposit
are notified every year before April 1, and is aligned with G-Sec
rates of similar maturity, with a spread of 0.25 per cent.
Liquidity
The POTD is liquid, despite the deposit lock-in. One can borrow
against the deposit or withdraw the deposit prematurely.
Post Office Term Deposit
The main objective of the POTD is to provide an assured return
on the deposit depending on the duration of the deposit. The
low-risk associated with this deposit scheme makes it a
popular small savings deposit.

Features
ELIGIBILITY
You nneed tto bbe aa RResident IIndian ppreferably wwith aa ppost ooffice ssavings bbank aaccount
ENTRY AGE
A mminor aabove aage 110 yyears ccan oopen aan aaccount oon ttheir oown nname ddirectly
INVESTMENTS
Minimum: `200 aand iin mmultiples tthereof
INTEREST
Interest rrate oof 88.40 pper ccent tto 88.50 pper ccent ddepending oon tthe ttenure oof tthe
deposit
Interest ppayable aannually bbut ccalculated qquarterly
TENURE
1,2,3 oor 55 yyears
Individual
Joint
NOMINATION

Other risks
There is no risk associated with this investment and hence, it is
risk-free.
Credit Rating
As the POTD is offered by the Government of India, it does not
Tax Implications
There is no tax benefit on
deposits with less than five-year
tenure. The five-year deposit
qualifies for tax deductions
under Section 80C on the sum
deposited.
You can open the account at any head post office or general post
office.
Once you have selected the post office to open the POTD
account, you can open a POTD for which you will need the
following documents:
A deposit opening form provided by the post office
(permanent account number) card or declaration in form No
60 or 61 as per the Income Tax Act 1961, driving license,
GOING ONLINE
There is no online access to
post office accounts as yet.
Premature withdrawal or closure of the POTD is permitted after
completion of six months of initiating the deposit.
Withdrawal after six months but before completion of a year will
earn 4 per cent that post office savings account earns.
Withdrawal after a year earns interest which is 1 per cent less than
what the deposit earns for that specific deposit tenure.

voter’s ID or ration card
account opening
Choose a nominee and get a witness signature to complete
the formalities to start the deposit
How to Operate the Account?
You need a pay-in slip with the initial deposit opening sum
Payment can be made by cash or cheque
Points to Ponder
Portability of the account from one post office to another
Facility of extending the deposit on maturity
Interest income is taxable but there is no TDS certificate
issued
Maturity proceeds not drawn are eligible to saving account
interest rate for a maximum period of two years
The POTD has a passbook with rules applicable to the account
stated in them.
Time Deposit Interest Rates over the years
Maturity Period 2015-16 2014-2015 2013-2014 2012-2013
1-year time deposit 8.4 8.4 8.2 8.2

TIPS AND STRATEGIES
Instead of depositing a large sum in a single deposit,
one should consider splitting the deposit, which could
also be across varying tenures. This way, in case of
any premature withdrawal; only a few deposits will lose
interest
One can stagger the deposits over different tenures to
create variable income streams over time

Public
Provident
Fund
Warren Buffett said, “Only buy something
that you’d be perfectly happy to hold if the
market shut down for ten years.” For tax
savers, the public provident fund does one
step better; it guarantees returns. This
systematic savings plan works on the dual
benefit of power of compounding and
regular investments.
7

The public provident fund (PPF) is a long-term savings
instrument established by the Central Government, which
offers tax concessions on savings as well as withdrawal after the
lock-in period. This scheme came into force from July 1, 1968
and is backed by the government with the objective of providing
old-age income security to the self-employed and those working
in the unorganised sector. Though the scheme is voluntary, the
assured return and tax deduction on savings has fuelled its
popularity.
Capital Protection
The capital in a PPF account is completely protected as the
scheme is backed by the Government of India, making it fully
risk-free with guaranteed returns.
The PPF account is not inflation protected, which means
whenever inflation is above the current guaranteed interest rate
of 8.70 per cent; the deposit earns no real returns. However,
when the inflation rate is below 8.70 per cent, it does manage a
positive real rate of return.
Guarantees
The interest rates on this deposit are notified every year before
April 1, and is aligned with G-Sec rates of similar maturity, with
a spread of 0.25 per cent. Currently, the interest rate on PPF
deposits is 8.70 per cent per annum which is guaranteed for the
deposits made in financial year 2015-16.
Public Provident Fund
The primary objective of saving in the PPF account is to avail
tax deduction on deposits, guaranteed returns on investment
and tax free withdrawal on maturity.

Features
ELIGIBILITY
You nneed tto bbe aa RResident IIndian
ENTRY AGE
No aage iis sspecified ffor aaccount oopening
INVESTMENTS
Maximum: `1.5 llakh pper aannum
A mmaximum oof 112 ddeposits aallowed iin aa ffinancial yyear
INTEREST
8.70 pper ccent ccompounded aannually
TENURE
15 yyears
On ccompletion oof 115 yyears, tthe aaccount ccan bbe eextended bby 55 yyears
The PPPF aaccount mmatures aafter 115 yyears bbut tthe ccontribution hhas tto bbe mmade ffor
16 yyears iin aall. TThe 115-yyear pperiod iis ccalculated ffrom tthe ffinancial yyear ffollowing
the ddate oon wwhich tthe aaccount iis oopened. EEffectively tthe PPPF aaccount mmatures
on tthe ffirst dday oof tthe 117th yyear
Individual
NOMINATION

Liquidity
The PPF is liquid, despite the 15-year lock-in stipulated with
this account. The liquidity is offered in the form of loans from
the third year and withdrawals subject to conditions from the
seventh year.
Credit Rating
As the PPF is backed by the Government of India, it does not
Exit Option
Premature closure of a PPF account is not permissible except in
case of death of the account holder.
Other risks
Savings in this product is completely risk free because of the
government-backing.
Loan available from the third year of opening the account to the
sixth year, wherein the loan amount will be up to a maximum of
25 per cent of the balance in the account at the end of the first
financial year. However, the loan has to be repaid with interest
within 36 months. For loans before Decemeber 1, 2011, the
interest rate is 1 per cent and for loans thereafter, it is 2 per cent.
One withdrawal during a financial year which is up to 50 per cent
of the balance at the end of the fourth year, preceding the year in
which the amount is withdrawn or the end of the preceding year,
whichever is lower. For example, if the account is opened in
2010-11, and the first withdrawal is made during 2016-17, the
amount one can withdraw is limited to 50 per cent of the balance
as on March 31, 2013, or March 31, 2016, whichever is lower.
Thereafter, one withdrawal every year is permissible.
The balance amount in the PPF account is not subject to attachment
under any order or decree of court in respect of any debt or liability.

Tax Implications
The sum invested in PPF account is eligible for tax deduction
under Section 80C subject to a maximum savings of `1.5 lakh
in a financial year. On maturity, the entire amount including the
interest is tax free. The deposit is also exempt from wealth tax.
Where to Open an Account
You can open the account at various places such as:
Any head post office or general post office
State Bank of India or branches of its associated banks like
the State Bank of Mysore
Branches of nationalised banks such as Bank of Maharashtra
are permitted to collect direct taxes
Private sector banks such as ICICI Bank
Once you have selected the
location to open an account you
will need the following
documents:
An account opening form.
Two passport size
photographs
Address and identity proof
such as copy of the passport,
PAN (permanent account
number) card or declaration
in form No 60 or 61 as per the
Income Tax Act 1961, driving
license, voter’s identity card
or ration card
account opening
Choose a nominee and get a witness signature to complete
the formalities to get started
GOING ONLINE
Online access to the PPF
account is yet to completely
take-off. Some banks such
as SBI and ICICI offer online
access to PPF accounts
opened through them. With
this facility you can make
online deposits to your
account.
PPF accounts opened at
post offices do not have
online access facility yet

TIPS AND STRATEGIES
Exhaust the full investment permissible to avail tax
deduction on the first day of each financial year. This
will ensure that your yearly investment earns interest
for the complete year and enjoys the compounding
effect of interest in PPF and accumulates significant
sums over the long-term. By investing the full sum
(See: Making the most of PPF) each year into PPF will
accumulate `36.75 lakh at the end of the 15-year PPF
tenure of which the investment contribution is only
`19.5 lakh; the rest is the advantage of compounding.
Deposit the PPF contribution between the 1st and 5th
of the month to earn interest for the whole month.
You need a pay-in slip with the initial account opening sum
You get a PPF passbook with your photo affixed stating the
nominee you have selected
Cheque
Money transfer
Points to Ponder
Minimum sum needed to start an account
Penal provisions in case of loans and withdrawals
The PPF account rules can be read in the passbook.

Making the most of PPF
Annual Interest Year end
Year Deposit (`) earned (`) Balance
2003-04 1,00,000 8,000 1,08,000
2004-05 1,00,000 16,640 2,24,640
2005-06 1,00,000 25,971 3,50,611
2006-07 1,00,000 36,049 4,86,660
2007-08 1,00,000 46,933 6,33,593
2008-09 1,00,000 58,687 7,92,280
2009-10 1,00,000 71,382 9,63,663
2010-11 1,00,000 85,093 11,48,756
Apr-Nov 2011 1,00,000 66,600 13,15,356
Dec-2011 to Mar-2012 1,00,000 37,748 13,54,549
2012-13 1,00,000 1,24,551 15,39,907
2013-14 1,00,000 1,42,672 17,82,579
2014-15 1,50,000 1,68,134 21,00,714
2015-16 1,50,000 1,95,812 24,46,526
2016-17 1,50,000 2,25,898 28,22,424
2017-18 1,50,000 2,58,601 32,31,024
2018-19 1,50,000 2,94,149 36,75,174
Interest rate from 2003-04 to November 2011: 8%; Dec-2011 to March 2012:
8.6%; April 2012 to March 2013: 8.8%; From April 2013: 8.7%
The PPF is a good long-term accumulation instrument. Over a 16-year period
investing the full sum to claim tax deduction under Section 80C each year from
2003-4 would be worth `36.75 lakh
Public Provident Fund over the years
2015-16 2014-2015 2013-2014 2012-2013
PPF 8.7 8.7 8.7 8.8

National
Savings
Certificate
(Series VIII
& IX)
To have the cake and eat it too is a popular
figure of speech, which is true when it
comes to NSC investments. You can have
the best of both the worlds, with assured
returns and tax benefits on investment. If
planned well, one can create a regular
income stream using this instrument.
8

The National Savings Certificate (NSC) is a popular and safe
small savings instrument that combines tax-savings with
guaranteed returns. This scheme is backed by the government,
and is one of the safest investment options available at post
offices. The distribution reach of post office has added to the
popularity of this scheme and is much sought after across all
investing classes.
Capital Protection
The capital in the NSC is completely protected as the scheme is
backed by the Government of India, making it totally risk-free
The NSC is not inflation protected, which means whenever
inflation is above the current guaranteed interest rate; the
deposit earns no real returns. However, when the inflation rate
is below the guaranteed interest rate, it does manage a positive
real rate of return.
Guarantees
The interest rate on the NSC is guaranteed. Currently, the
interest rate on NSC is 8.5 per cent on the 5-year option and 8.8
per cent per annum on the 10-year option, compounded half
yearly. The interest rates in this scheme are notified every year
before April 1, and is aligned with G-Sec rates of similar
maturity, with a spread of 0.25 per cent on the 5-year option and
0.5 per cent on the 10-year option.
National Savings Certificate (Series VIII & IX)
The main objective of investing in the NSC is to avail tax
deduction on deposits and guaranteed returns on investment.
The five and ten year tenure is used by many to create a
regular monthly income stream in retirement.

Features
ELIGIBILITY
You nneed tto bbe aa RResident IIndian tto bbuy tthese ccertificates
ENTRY AGE
No aage iis sspecified ffor aaccount oopening
INVESTMENTS
Certificates aare aavailable iin ddenominations oof `100, `500, `1,000, `5,000
and `10,000
INTEREST
8.5 pper ccent ccompounded hhalf yyearly oon 55-yyear ttenure
8.8 pper ccent ccompounded hhalf yyearly oon 110-yyear ttenure
TENURE
5- aand 110-yyears
Individual
Joint
NOMINATION

Liquidity
The NSC is liquid, despite the 5- and 10-year stipulated lock-in.
The liquidity is offered in the form of loans.
Credit Rating
The NSC is government backed and does not require any
commercial rating.
Exit Option
Premature encashment is possible after three years or in case of
death of the certificate holder.
Other risks
Savings in this product is risk free because of the government-
backing.
Tax Implications
The sum invested in an NSC is eligible for tax deduction under
Section 80C up to the `1.5 lakh limit stipulated in a financial
year including the accrued interest on existing certificates. The
interest earned on NSC on a yearly basis is added to the total
income under the head ‘Income from other sources’ and the
same can be claimed as deduction under Section 80C, making
the interest tax-free. But if the accrued interest is not taxed
every year on an accrual basis then the entire income is taxable
on maturity.
You can pledge the NSC certificates to obtain loans. The amount and
rate at which the loan is permitted depends on the lending institution.
Risks associated with loss or mutilation of certificate exists, for which
a duplicate certificate can be issued on furnishing an indemnity bond
in a format prescribed by the post office.

Where to Buy
Certificates can be
bought from any
head post office or
general post office.
How to Buy
Once you have decided on the
sum that you wish to invest:
You need to fill the NSC
application form available at
the post office
Carry original identity proof
for verification at the time of
buying
You can buy the certificate
with cash, cheque or demand
draft drawn in favour of the
postmaster of the post office
from where the NSC is being
bought
Choose a nominee and get a
witness signature to complete
the formalities when buying the certificate
Points to Ponder
Certificates are encashable at any post office in India
provided one has obtained transfer of the certificate to the
desired post office
GOING ONLINE
Currently there is no facility
for online access to the
NSCs. As a pilot project, a
few years ago the NSDL and
the postal department had
got into issuing NSC in a
dematerialised format
allowing for online access of
the same through online
broking websites. This
facility is not available
anymore. However, efforts
are on to reconsider issuing
NSC in demat form for the
convenience and benefit of
investors
National Savings Certificate
2015-2016 2014-2015
5-year NSC 8.5 8.5
10-year NSC 8.8 8.8
Prior to April 2012, NSC was a six year instrument
Certificates are transferable from one person to another person
before maturity.
Facility of purchase or payment to the holder of power of attorney.

TIPS AND STRATEGIES
The assured return on NSC can be used to create an
income ladder. Certificates can be bought every month
or quarter for appropriate denominations, which on
maturity will act as a steady income stream. For
instance, someone retiring in 2020 can create an
income ladder by investing a fixed sum every month
from August 2015. Some people use this ladder effect
to create an income stream that will last 10-15 years
by timing NSC maturity and re-investment to create an
assured income in retirement.
Illustration for a 6-month income stream on a
5-year NSC
Investment Amount (`) Maturity Amount (`)
April 2015 5,000 April 2020 `7,581
May 2015 5,000 May 2020 `7,581
June 2015 5,000 June 2020 `7,581
July 2015 5,000 July 2020 `7,581
August 2015 5,000 August 2020 `7,581
September 2015 5,000 September 2020 `7,581
Certificates are transferable across post offices
Interest income is taxable but no TDS certificate is issued

Kisan Vikas Patra
Kisan Vikas
Patra
Some people say the quickest way to
double your money is to fold it in half and
put it back in your pocket. However, for
ease of understanding among investors
there exists a post office savings scheme
which just does that; doubles your
investment after a fixed term.
9

The Kisan Vikas Patra (KVPs) is a popular and safe small savings
instrument that doubles the invested money in 8 years and 4
months. This scheme is backed by the government, which was
relaunched by the government on November 18, 2014.
Capital Protection
The capital in the KVP is completely protected as the scheme is
backed by the government of India, making it risk-free with
guaranteed returns.
The KVP is not inflation protected, which means whenever
inflation is above the current guaranteed interest rate of 8.7 per
cent; the deposit earned no real returns. However, when the
inflation rate is under 8.7 per cent, it can manage to give a
positive real rate of return.
Guarantees
The interest rate in the KVP is guaranteed and is 8.7 per cent
compounded yearly.
Liquidity
The KVP has liquidity, despite the 8 years and 4 months that it
takes to double the deposit. The liquidity is offered in the form of
loans and withdrawals subject to conditions. One can pledge the
KVP to take a loan from any bank or financial institution.
Kisan Vikas Patra
The main objective of the KVP is to double the sum deposited
in 8 years and 4 months. The simplicity of doubling the invest-
ment is easy for every investor to understand, the government
backing and guarantee make it a preferred route of invest-
ment for small savers.

Kisan Vikas Patra
Features
ELIGIBILITY
One hhas tto bbe aa RResident IIndian tto ppurchase tthis pproduct
ENTRY AGE
Certificate ccan bbe ppurchased bby aan aadult ffor hhimself oor oon bbehalf oof aa mminor
or bby ttwo aadults
MINIMUM INVESTMENTS
Certificates aare aavailable iin ddenominations oof `1,000, `5,000, `10,000 aand
`50,000
INTEREST
8.7 pper ccent ccompounded yyearly
TENURE
8 yyears aand 44 mmonths
OTHER ASPECTS
Premature eencashment aallowed ffor iinvestors
`100 wwould ddouble uup tto `200 iin 88 yyears aand 44 mmonths
Individual
Joint
NOMINATION
Facility iis aavailable ffor eexisting iinvestors

Credit Rating
As the KVP is backed by the government of India, it does not
require any commercial rating. This holds good for investors as
well.
Exit Option
Premature withdrawal is permitted at a cost for investors.
Other Risks
There is no risk associated with this investment for investors.
Kisan Vikas Patra
The facility of pledging the KVP to borrow is allowed and one can
take loans against the KVP from banks and financial institutions.
Premature closure of the KVP is permitted wherein a pre-fixed value
of the KVP is paid as indicated in the table.
Amount Paid
Per cent of on `1,000
Tenure face value (%) face value (`)
2 yrs 6 mths or more but less than 3 yrs 20.1 1,201
3 yrs more but less than 3 yrs 6 mths 24.6 1,246
4 yrs or more but less than 4 yrs 6 mths 34.1 1,341
Liquidity on premature withdrawal

Tax Implications
For existing investors there is no
tax benefit on the deposit or the
interest that it earns. The yearly
interest accrued in the KVP is
taken as ‘Income from other
sources’ to compute income tax.
However, there is no TDS deducted.
Where to Buy
One can buy the KVP at any head post office or general post
office or at any designated nationalised banks.
How to Buy
Once you decide on the sum to invest
You have to fill the KVP application form available at the post
office or the designated banks.
Original identity proof for verification at the time of buying
is required.
You can buy the certificate with cash, cheque or demand
draft drawn in favour of the postmaster of the post office from
where the KVP is bought.
You have to choose a nominee and get a witness signature to
complete the formalities when buying this product.
Points to Ponder
The KVP can be encashed at any post office or nationalised
bank in India provided one has obtained transfer of the cer-
tificate to the desired post office or bank for existing investors
in this instrument.
KVPs are transferable across post offices and designated
banks for existing investors.
Interest income is taxable but no TDS certificate is issued.
Kisan Vikas Patra
GOING ONLINE
Financial products offered at
the post office have not
gone online as yet.

Kisan Vikas Patra
TIPS AND STRATEGIES
The doubling of money in a KVP is used to accumulate
funds and create an income ladder. KVPs are bought
every month or quarter for appropriate denominations,
which on maturity work as a steady income stream
which is twice of what one deposited. Some people use
this ladder effect to create an income stream that last
10-15 years by timing KVP maturity and re-investing the
same to create an assured income in retirement.

Sukanya
Samriddhi
Yojana
Investments in the Sukanya Samriddhi
Scheme are already eligible for deduction
under Section 80C. All payments to the
beneficiaries, including interest payment on
the deposit, will also be fully exempt.
- Finance Minister, Arun Jaitley, in his
Budget speech
10

The Sukanya Samriddhi Yojana (SSY) is a tax-free small savings
scheme for the girl child. It was launched on January 22, 2015.
Parents or the legal guardian of a girl child of age ten years or less
can open an SSY account in the name of the girl child in
designated branches of public sector banks or in a post office,
with a minimum amount of `1,000.
Entry Age
Parents or legal guardian of a girl child, ageing ten years or less,
can open an SSY account.
Minimum Investment
The account can be opened with a minimum deposit of `1,000.
Failure to make payments as per the chosen frequency can lead to
the deactivation of the account. It can then be revived only after
paying a penalty of `50 along with the missing payments.
Deposits can be made multiple times in a year, with an upper
limit of `1,50,000.
Capital Protection
Since the scheme offers a relatively fixed rate of interest, the
capital is adequately protected.
Since the returns are linked to the government bond yield, there
is no assured inflation protection.
Sukanya Samriddhi Yojana
The Sukanya Samriddhi Yojana is a special initiative for the
girl child. The scheme aims to encourage savings for the girl
child. The potential risk is that there is no inflation protection,
though the capital is adequately protected.

Features
ELIGIBILITY
You nneed tto bbe aa rresident IIndian aand pparent/legal gguardian oof tthe ggirl cchild.
ENTRY AGE
Parents oor llegal gguardian oof aa ggirl cchild, aageing tten yyears oor lless, ccan oopen aan
SSY aaccount.
ACCOUNT OPENING FEE
No ffee. AA mminimum ccash ddeposit oof `1,000 iis rrequired tto oopen aan aaccount
ACCOUNT MAINTENANCE AND CHARGES
Failure tto mmake ppayments aas pper tthe cchosen ffrequency ccan llead tto tthe ddeactiva-
tion oof tthe aaccount.
A ddeactivated aaccount ccan tthen bbe rrevived oonly aafter ppaying aa ppenalty oof `50
along wwith tthe mmissing ppayments.
INTEREST
The iinterest rrate iis tto bbe 775 bbasis ppoints oover tthe tten-yyear ggovernment bbond
yield oof tthe pprevious ffinancial yyear.
OTHER FEATURES OFFERED
The sscheme wwill hhave tthe eexempt-eexempt-eexempt ((EEE) mmodel.
The aaccount ccan bbe oopened aat aany ppost ooffice iin IIndia ddoing tthe ssavings bbank
work oor aat aany bbranch oof aan aauthorised ccommercial bbank.
The ccorpus wwill ccontinue tto eearn iinterest iif tthe aaccount iis nnot cclosed oon mmaturity.
TENURE
The aaccount wwill mmature oon tthe ccompletion oof 221 yyears ffrom tthe ddate oof oopening
of tthe aaccount oor aat tthe ttime oof mmarriage oof tthe aaccount hholder oon aattaining 118 yyears
of aage, wwhichever iis eearlier.
Up tto 550 pper ccent oof tthe ccorpus ccan bbe wwithdrawn oonce tthe ggirl tturns 118.
Girl cchild uunder tten yyears tthrough tthe pparents oor tthe llegal gguardian
NOMINATION
Not aavailable

Liquidity
The contributions under the SSY cannot be withdrawn before the
girl attains 18 years of age. Therefore, the minimum lock-in
period is eight years. As of now there is no loan facility available.
Guarantees
The interest rate under the SSY is to be 75 basis points over the
ten-year government bond yield of the previous financial year. At
present, the deposit will fetch a yearly interest rate of 9.2 per
cent.
Tax Implications
The scheme will have the exempt-exempt-exempt (EEE) model,
where the deposits, the interest earned as well as the maturity
amount will be tax-free.
Exit Options
The account will mature on the completion of 21 years from the
date of opening of the account or at the time of marriage of the
account holder on attaining 18 years of age, whichever is earlier.
However, up to 50 per cent of the corpus can be withdrawn once
the girl turns 18. The corpus will continue to earn interest if the
account is not closed on maturity.
Where to Open the Account
The account can be opened at any post office in India doing the
savings bank work or at any branch of a commercial bank
authorised by the central government to open an account under
Sukanya Samriddhi Account Rules, 2014.
The SSY account can be opened only for the girl child and the girl
child must not be older than ten years. Also, the minimum lock-in
period is eight years.

How to Open the Account
The parent/guardian can approach any post office or bank with
the birth certificate of the girl child, along with the ID and
address proof of the parent/guardian.
Points to Ponder
The depositor can open only one account in the name of one girl
child and a maximum of two accounts in the name of two
different children. However, the guardian can open the third
account in the case of birth of twin girls as the second birth, or if
the first birth itself results into three girl children.
TIPS AND STRATEGIES
The SSY could be a good avenue for tax saving
It has the benefit of the EEE tax model
Attractive yield makes it stand out in debt investments
The scheme keeps earning interest even post maturity

Senior Citizen
Saving
Scheme
George Foreman said; “The question isn’t
at what age I want to retire, it’s at what
income.” He could not have been more
right about income in retirement. Defined
pensions are a lot better to look forward to
in retirement than anything else.
11

Retirement brings with itself several complications and doubts,
but there are savings products that are safe and ensure guaranteed
retirement income. The Senior Citizen Savings Scheme (SCSS),
launched in 2004, is a deposit scheme introduced by the
Government of India to provide guaranteed returns to senior
citizens through a safe investment. This scheme ensures a regular
income stream for senior citizens in retirement.
Capital Protection
The capital in the SCSS is completely protected as the scheme
The SCSS is not inflation protected, which means whenever
inflation is above the current interest rate; the deposit earns no
real returns. However, when the inflation rate is below the
current interest rate, it does manage a positive real rate of return.
Guarantees
The interest rates on this scheme are notified every year before
April 1, which is aligned with G-Sec rates of similar maturity,
with a spread of 1 per cent. Currently, the interest rate in the
SCSS deposit is 9.30 per cent per annum compounded quarterly.
Liquidity
The SCSS is liquid, despite the 5-year stipulated lock-in. The
liquidity is offered in the form of withdrawals subject to
conditions and penalties.
Senior Citizen Saving Scheme
The main objective of the SCSS is to provide an assured 9.30
per cent return paid every quarter to senior citizens which
helps them create a guaranteed regular income flow.

Features
ELIGIBILITY
You nneed tto bbe aa rretired RResident IIndian tto oopen aan aaccount
ENTRY AGE
60 yyears
55 yyears ffor tthose wwho hhave rretired oon ssuperannuation oor uunder aa vvoluntary oor
special vvoluntary sscheme
The rretired ppersonnel oof DDefence SServices ((excluding CCivilian DDefence
Employees) sshall bbe eeligible tto iinvest iirrespective oof tthe aage llimits ssubject tto tthe
fulfilment oof sspecified cconditions
INVESTMENTS
Minimum: `1,000
Maximum: `15 llakh
Deposits hhave tto bbe iin mmultiples oof `1,000
INTEREST
9.30 pper ccent pper aannum ccompounded qquarterly
The iinterest iis ppaid oon MMarch 331, JJune 330, SSeptember 330 aand DDecember 331,
each yyear
TENURE
5 yyears wwhich ccan bbe eextended bby 33 mmore yyears
Individual
Joint wwith sspouse
NOMINATION

Credit Rating
As the SCSS is backed by the Government of India, it does not
Exit Option
Premature closing of the account is permitted with penalty.
Other Risks
There is no risk associated with this investment which is why
the investment is totally risk-free.
Tax Implications
The sum invested in the SCSS
on or after April 1, 2007 is
eligible for tax deduction under
Section 80C of the Income Tax
Act. However, the interest
earned on the deposit is fully
taxable and tax is deducted at
source (TDS) only if the total interest in a year is above `10,000.
However, if the income is not taxable, one has to provide form
15H or 15G so that no tax is deducted at source.
GOING ONLINE
If one has an online bank
account with a bank which
also offers SCSS; the two
can be linked which enables
online access to the SCSS.
The facility of pledging the deposit in the SCSS account to obtain
loans is not permitted as it defeats the purpose of regular income.
Premature withdrawal or closure of the SCSS account is permitted
after completion of one year from the date of opening the account
after deducting a penalty for early withdrawal or closure that varies
from 1-1.5 per cent depending on the completed tenure of the
account.
If the account is closed after the first year and before the end of the
second year, an amount equal to 1.5 per cent of the deposit shall
be deducted as penalty.
If the account is closed on or after the second year, an amount
equal to 1 per cent of the deposit shall be deducted.

Any head post office or general post office. Select branches of
several designated nationalised banks: State Bank of India,
State Bank of Hyderabad, State Bank of Indore, State Bank of
Bikaner and Jaipur, State Bank of Patiala, State Bank of
Saurashtra, State Bank of Mysore, State Bank of Travancore,
Allahabad Bank, Bank of Baroda, Bank of India, Bank of
Maharashtra, Canara Bank, Central Bank of India, Corporation
Bank, Dena Bank, Indian Bank, Indian Overseas Bank, Punjab
National Bank, Syndicate Bank, UCO Bank, Union Bank of
India, United Bank of India, Vijaya Bank and ICICI Bank.
Once you have selected the bank to open the SCSS account, you
will first need to open a savings bank account and you will need
the following documents:
An account opening form which the bank will provide
(permanent account number) card or declaration in form No
60 or 61 as per the Income Tax Act 1961, driving license,
voter’s identity card or ration card
account opening
Points to Ponder
Portability of the account from one bank to another
ECS transfer of interest to the savings bank account
Penal provisions in case of early closure of the account
The SCSS rules can be found in the passbook.

TIPS AND STRATEGIES
The guaranteed interest from this scheme can be used
to create income streams to manage cash flows in
retirement.
Extend the SCSS account on completion of five years
by an additional three years
Split the SCC account into two individuals accounts for
self and spouse to reduce the impact of early closure
of an account in case of emergencies
It is wise to foreclose the account and invest in a bank
savings account whenever banks offer higher interest
rate on long-term deposits
Payout on the SCSS Deposit
Amount of Deposit (`) Quarterly interest (`)
10,000 230
25,000 575
40,000 920
70,000 1,610
1,00,000 2,300
2,00,000 4,600
5,00,000 11,500
8,00,000 18,400
11,00,000 25,300
15,00,000 34,500
SCSS over the years
2015-2016 2014-2015 2013-2014
5-year SCSS 9.3 9.2 9.2

Post Office
Monthly
Income
Scheme
Though the postal system is finding few
takers with the advent of email and other
forms of communication, the guarantees
offered by post office small savings make
them still one of the most sought after
locations for financial products.
12

The Post Office Monthly Income Scheme (POMIS) is a
guaranteed return investment available at the post office. On
the deposit that you make with the post office, you get an
assured monthly income. Currently, one earns an 8.4 per cent
interest per year on the deposit, which is paid every month and
hence the name monthly income scheme. Once you make the
deposit you get the interest payout each month from the date of
making the investment, not from start of the month.
Capital Protection
The capital in the POMIS is completely protected as the scheme
The POMIS is not inflation protected, which means whenever
inflation is above the current guaranteed interest rate of 8.40
per cent; the return from the scheme earns no real returns.
However, when the inflation rate is below 8.40 per cent, it does
manage a positive real rate of return.
Guarantees
The interest rate in the POMIS is guaranteed and is currently
8.40 per cent per annum and paid out monthly. The interest
rates on this scheme are notified every year before April 1, and
is aligned with G-Sec rates of similar maturity, with a spread of
0.25 per cent.
Post Office Monthly Income Scheme
The main objective of the POMIS is to provide an assured 8.4
per cent returns paid monthly to the account holders and help
them create a guaranteed regular income. Though it offers no
tax incentive, it is a preferred instrument amongst small
savers for the government backing that this product offers.

Post Office Monthly Income Scheme
Features
ELIGIBILITY
You nneed tto bbe aa RResident IIndian ppreferably wwith aa ppost ooffice ssavings aaccount
ENTRY AGE
Minor aabove 110 yyears oof aage ccan oopen aan aaccount iin ttheir oown nname ddirectly
There iis aa llimit oof `3 llakhs sset ffor mminors tto oopen tthis aaccount wwith aa gguardian,
which iis nnot cclubbed wwith tthe iinvestment llimit aapplicable tto tthe gguardian aas aan
independent iinvestor
INVESTMENTS
Minimum: `1,500
Maximum: `4.5 llakh iin aa ssingle aaccount
Maximum: `9 llakh iin aa jjoint aaccount
INTEREST
8.4 pper ccent pper aannum ppaid mmonthly
TENURE
5 yyears
Individual
Joint
NOMINATION

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