Banks and NBFCs offer higher income for Senior citizens

Fincare Small Finance Bank offers 8.85% for senior citizen for 36-42 months term deposit 

Shriram Finance offers 8.5% to senior citizens for 60 months term deposit on yearly interest payout

Senior citizens are typically defined as individuals who are 60 years or above. Many banks and financial institutions offer fixed deposit schemes with higher interest rates for senior citizens. The interest rates for senior citizens are generally higher by 0.25% to 0.75% compared to the rates offered to regular customers

For senior citizens, it’s their life savings. Most part of their EPF and other savings along the years get deposited in their trusted banks for a monthly/ quarterly interest which supplement their pensions. These interest income help them in running their house medical expenses and little extra in some leisure activities

So, while the interest rates on the rise, one should know the interest income they lock in the high interest rates. 

Will revise the blog if the interest rates rises further post April 6th, 2023.

Small Finance Bank FD Rates

BanksTenure (for highest interest income)Senior citizen deposit rates
Equitas Small Finance Bank888 days 8.70%
ESAF Small Finance Bank2 to less than 3 years 8.50%
AU Small Finance Bank560 days8.75%
Fincare Small Finance Bank36 months 1 day to 42 months8.85%
Jana Small Finance Bank2 years – 3 years8.80%

Bank FD Rates for senior citizen 

SFBTenure (for highest interest income)Senior citizen deposit rates
State Bank of India2-3 years, 5-10 years7.50%
Canara Bank400 days 7.65%
AXIS Bank 2 years < 30 months8.00%
Federal Bank15 months to 2 years7.75%
HDFC Bank15 months to 18 months7.60%
South Indian Bank1 year 1 day 7.50%

NBFC FD Rates for senior citizen (Interest payout)

NBFCTenure (for highest interest income)Senior citizen deposit rates
Shriram Finance60 months8.5% (yearly payout)
Bajaj Finserv44 months7.95% (yearly payout)
ICICI Home Finance65 months7.95% (yearly payout)
Sundaram Finance24, 36 months8.01%  (quarterly payout)

Fixed deposits are added in the annual income and taxed at marginal tax slab. Premature closure allowed with applicable penal cut.

It’s important to note that fixed deposits are generally considered to be a safe investment option, in India, there is a deposit guarantee of upto Rs. 5 lakhs, insured by DICGC, but they may not provide high returns compared to other investment options. So, before investing in a fixed deposit, it’s important to assess your financial goals and risk appetite.

Other income options for senior citizens are PM Vyay Vandan Yojana, Senior Citizen Savings Scheme, annuity plans by life insurance companies

Apart from above lists, there are other Banks and NBFC options you can choose. You can visit the websites of different banks and financial institutions to compare their fixed deposit rates for senior citizens and choose the one that suits your needs.

Evolved Investor knows change is the only constant

Evolved investor knows, change is the only constant. Its not too long ago PFAs, CFPs, Mutual Fund companies and me, screamed at top of our voices that Debt Mutual Funds were better fixed income option with taxes and indexation benefits. Even, Banks sold debt mutual funds to customers!

Alas! On 24th March 2023, Finance Bill eliminated all the tax and indexation benefits enjoyed by the Mutual Funds were stripped off brutally. 

Investors conditined to say ‘Mutual Funds Sahi Hai’, suddenly feel confused. What changes for investors? Honestly, not much for citizens investing in debt mutual funds upto 20% tax brackets. They can still get an extra return on the debt mutual funds compared to the Fixed Deposits. But for Gold ETF, Fund of Funds and International Funds, its little more than a jolt.    

For debt instruments, what changes is the balance of power between the Banks and the Mutual Funds. Over the years Debt Mutual Fund evolved as a lucrative fund raise options for corporates and an investment vehicle for investors. Mutual Funds saw a late but steady growth in debt funds participation, especially last 5 years have been defining with various index funds, target maturity funds etc coming in play. 

As per reuters report debt mutual funds held, Rs.12.42 trillion in debt fund as on 31st Dec 2022, while fixed deposits in Bank stood at Rs.178 trillion rupees in deposits. 

For Mutual Funds, one of the most regulated sector in India, the path to growth has been rough yet spectacular. On Jan 1, 2013 many predicted a slowdown of the industry with birth of Direct Mutual Funds option. Since then, Mutual Fund industry has more than quadrupled its assets under management. Exactly after 10 years, on 1st April 2023, another reform has been plannedto take away important tax advantage they enjoyed thus far. Lets see, what still remains? And can MF industry come back stronger. 

One point still remains, Debt MFs likely to still give 1-2% higher return thanFixed deposit schemes. A banker mentioned, Debt MF still be more efficient with no penalty for pre-mature exits. There could be removal of exit loads from the debt MF products to make it lucrative for investors. 

In global funds, investors enjoy dual opportunity to make returns on rupee depreciation against dollars and the real returns of the funds. It still makes a lucrative option over the long term and SIP mode as it is likely generate better returns than debt products

GOLD ETFs have become less lucrative over the years with the launch of Sovereign Gold Bonds which offers 2.5% taxable interest income and no tax on the maturity of the bonds.   

Economic Environment, investment vehicles will keep evolving. Like ULIP agents lost the massive commission, Mutual Funds agents lost entry loads, and entry of direct MF brought in option to complete An intelligent investor will learn the tricks of the trade and come out shining finding more opportunities to create wealth

Lesser known Income option for senior Citizens in India

Reverse mortgage: Monetizing residential property retaining the property rights

Reverse mortgage is a financial product that allows elderly homeowners to borrow against their property. Under the scheme, a senior citizen can mortgage their residential property to the lender, who will then pay the borrower a certain amount of money on a regular basis. The borrower can choose to receive the payment in the form of a lump sum, monthly, quarterly or annual payments, or as a line of credit. The amount of money that can be borrowed is determined by the value of the property, the borrower’s age, and the prevailing interest rate.

The borrower retains ownership of the property and can continue to live in the property until they die, after which the property is sold and the loan is repaid with interest from the sale proceeds. If the sale proceeds are higher than the loan amount and interest, the excess amount is passed on to the borrower’s legal heirs. If the sale proceeds are lower than the loan amount and interest, the lender cannot recover the shortfall from the borrower or their heirs.

The In India, reverse mortgages are regulated by the National Housing Bank (NHB) and are available to senior citizens above the age of 60 years.

Benefits of Reverse Mortgage in India:

  1. Supplement retirement income: Reverse mortgages can provide a source of regular income for senior citizens who may not have enough retirement savings.
  2. No repayment required: Unlike traditional loans, reverse mortgages do not require borrowers to make monthly repayments. The loan amount and accrued interest are usually paid back by the sale of the property after the borrower passes away or permanently moves out.
  3. Tax-free income: The income received from a reverse mortgage is tax-free, which can be a significant advantage for borrowers who need additional income but want to avoid paying taxes.
  4. Retain ownership of property: Borrowers can continue to live in their homes and retain ownership, which means they can still benefit from any potential increase in property values.

Drawbacks of Reverse Mortgage in India:

  1. High interest rates: The interest rates for reverse mortgages in India are usually higher than traditional home loans, which can make them expensive in the long run.
  2. Limited loan amount: The loan amount for a reverse mortgage is based on the value of the property, and the maximum loan amount is usually capped at Rs. 1 crore. This may not be sufficient for borrowers who need a larger amount of cash.
  3. Risk of losing property: If borrowers are unable to repay the loan amount and interest, they risk losing their property to the lender.
  4. Limited options for heirs: When the borrower passes away, their heirs may have limited options for retaining the property or repaying the loan, which can lead to a loss of inheritance.

It’s important to carefully consider the benefits and drawbacks of reverse mortgages in India before deciding whether they are a good option for your financial needs. It’s also advisable to seek the advice of a financial advisor or lawyer to understand the terms and conditions of the loan agreement.

The following Banks offer reverse mortgage  on residential property. In India, mortgage amount is capped at Rs. 1 crore. Loan amount can be taken in monthly, qurterly, semi-annually or annual basis

State Bank of India 

Resident Type: Resident Indian

Minimum Age: 60 years for single borrower. For join borrower, younger spouse should be at least 58 years Loan Tenure : 10-15 years, depends on age of borrower Loan Amount: Minimum Rs. 3 lakhs & Maximum Rs. 1 crore LTV – In metro – 90%, Urban – 80%, rest – 70% Interest Rates – 8.7% onwards 

Bank of Baroda – Baroda Ashray  Resident Type: Resident Indian Minimum Age: 60 years Loan eligibility upto 1 crore

Union Bank reverse mortgage  Loan – Rs. 1 lakh – 1 crore Lumpsum payout only for medical reasons  Loan eligibility- Depends on value of property  Payment Tenure– 15 – 20 years, if Borrower is aged between 60-65 years. Above 65, Tenure is 10-20 years 

These loans like home loans has processing fee and taxes. Generally senior citizens get 40-60% of the home value as per news sources. It is ideal for senior citizens who don’t have adequate savings. It is also an option for high medical expenses. 

PMJDY: Important avenue of financial inclusion for unbanked citizen

Pradhan Mantri Jan Dhan Yojana (PMJDY) is a scheme that aims to provide financial inclusion to every household in India. The first and most important benefit is its free of charge zero balance account and can be used to get government pensions and subsidies directly transferred in the account. The scheme offers several benefits to Indian citizens, such as:

  1. Zero balance account: Senior citizens can open a bank account with zero balance under PMJDY, which means that they do not need to maintain a minimum balance in their account.
  2. Interest on savings: Senior citizens can earn interest on their savings, which can help them in managing their finances.
  3. Overdraft facility: Senior citizens can avail of an overdraft facility of up to Rs. 10,000, which can help them in managing unexpected expenses.
  4. Insurance cover: Senior citizens are also eligible for personal accident insurance cover of Rs. 2 lakhs under PMJDY.
  5. Pension account – In addition to these benefits, senior citizens can also avail of a pension through the government’s Pradhan Mantri Vaya Vandana Yojana (PMVVY) scheme, which is designed specifically for senior citizens. Overall, PMJDY has been successful in bringing financial inclusion to senior citizens and has helped in improving their financial security and independence.

The scheme aims to promote financial inclusion and literacy among all sections of society. This can help specially unbanked citizens to become more financially aware and independent and access banking services more easily. It provides an excellent opportunity for them to access banking services and improve their financial well-being.

What are the best government schemes for senior citizens?

Seven important schemes for financial and food security for senior citizens of in India, we must know and educate who may need it the most. spread the information and smile from our elders in the society.

Indian Government is actively working towards ensuring health and care for senior citizens. Besides central govt, many state government such as Karnataka, Maharashtra and other states are providing elderly with pension scheme to secure their retired life. These schemes an be availed by senior citizens staying alone, with family or old age home alike.

The notable schemes for seniors are:

National Social Assistance Programme (NSAP): Under The Indira Gandhi National Old Age Pension Scheme (IGNOAPS) is a social security pension scheme for senior citizens in India. It is a government-sponsored scheme that aims to provide financial assistance to old and destitute people who have no means of subsistence and are living below the poverty line. Under the scheme, senior citizens above the age of 60 years who belong to the Below Poverty Line (BPL) category are eligible for a monthly pension of Rs. 400 per month.

Pradhan Mantri Vaya Vandana Yojana (PMVVY): This scheme is a pension scheme that offers a guaranteed monthly income to senior citizens above 60 years of age. The scheme offers a guaranteed return per annum for 10 years.

Senior Citizen Saving Scheme (SCSS): This scheme is a savings scheme that offers a higher interest rate to senior citizens above 60 years of age.

Atal Pension Yojana (APY): This scheme is a pension scheme aimed at providing a regular income to senior citizens above 60 years of age.

National Pension System (NPS): This is a voluntary retirement savings scheme launched by the government of India for all citizens aged between 18 and 60 years. Senior citizens can also invest in NPS and avail tax benefits

Pradhan Mantri Jan Arogya Yojana (PMJAY): This is a health insurance scheme launched by the government of India for the poor and vulnerable sections of the society, including senior citizens. The scheme provides coverage up to Rs. 5 lakh per family per year for secondary and tertiary hospitalization.

Annapurna Scheme: This is a food security scheme launched by the government of India for senior citizens who are unable to fend for themselves. Under the scheme, eligible beneficiaries are provided with 10 kg of food grains per month.

Many of the schemes mentioned here are not onle for senior citizen but the under-privileged segment, who don’t have access to important information at their disposal. Let’s do our bit to spread awareness.

Annapurna Scheme – a food security scheme – eligibility, features and exclusions

There are many government schemes to support under-privileged population. Most of them do not have any means or mode to know the ongoing schemes, If you know poor senior citizen, do lend a hand and support them to get a foothold and secure food and health. In this post, attempted to elaborate on Annapurna scheme, a government sponsored scheme for senior citizen.

The Annapurna Food Security Scheme is a government-supported program in India that provides food grains at subsidized rates to eligible senior citizens who are unable to meet their food requirements. The scheme was launched in 2000 and is implemented by the Ministry of Consumer Affairs, Food and Public Distribution.

Who can apply:

  1. The scheme is available to senior citizens who are aged 65 years or above and are not receiving any pension benefits.
  2. The applicant should belong to a household below the poverty line (BPL).
  3. The applicant should not be receiving any other benefits under any other government-sponsored food security scheme.

Features:

  1. Under the scheme, eligible beneficiaries are provided 10 kg of food grains per month at a subsidized rate of Rs. 3 per kg for rice and Rs. 2 per kg for wheat.
  2. The food grains are distributed through the designated Fair Price Shops (FPS).
  3. The beneficiaries can choose to receive either rice or wheat as per their preference.
  4. The scheme is implemented by the State Governments with the support of the Central Government.
  5. The scheme aims to ensure food security for senior citizens who are unable to meet their basic food requirements.

Exclusions:

  1. Senior citizens who are receiving any other pension benefits are not eligible for the Annapurna Food Security Scheme.
  2. Senior citizens who are already receiving benefits under any other government-sponsored food security scheme – such as the National Food Security Act (NFSA) or the Antyodaya Anna Yojana (AAY) are also not eligible for the scheme.

Do you know about the government Health Insurance scheme?

Pradhan Mantri Jan Arogya Yojana (PMJAY) is a health insurance scheme launched by the Government of India in September 2018. Aimed at providing financial protection to the underprivileged families including senior citizens in India and help them get access to quality healthcare services without worrying about the financial burden.

Under PMJAY, eligible families are provided with an insurance cover of up to Rs. 5 lakhs per family per year for secondary and tertiary hospitalization. The scheme covers both pre-existing and new illnesses and offers cashless treatment at empanelled hospitals. The scheme also provides coverage for pre-hospitalization expenses for up to 30 days and post-hospitalization expenses for up to 60 days.

PMJAY is an entitlement-based scheme, which means that beneficiaries are identified based on the deprivation and occupational criteria of the Socio-Economic Caste Census (SECC) 2011 data. The scheme aims to cover around 10 crore families or approximately 50 crore beneficiaries across the country.

PMJAY is implemented by the National Health Authority (NHA) and is funded by the central and state governments. The scheme is a flagship program of Ayushman Bharat, which is a comprehensive healthcare program aimed at improving the overall health of the Indian population.

Pradhan Mantri Jan Arogya Yojana (PMJAY) provides several benefits to senior citizens, who are among the most vulnerable segments of the population when it comes to healthcare. Here are some of the key benefits of PMJAY for senior citizens:

  1. Health insurance coverage: Under PMJAY, senior citizens are eligible for health insurance coverage of up to Rs. 5 lakhs per family per year for secondary and tertiary hospitalization. This coverage can help senior citizens access quality healthcare services without worrying about the financial burden.
  2. Cashless treatment: PMJAY offers cashless treatment at empanelled hospitals, which means that senior citizens can get treatment without having to pay upfront for medical expenses. This can be especially beneficial for those who may not have the resources to pay for medical expenses out of pocket.
  3. Pre-existing conditions covered: PMJAY covers both pre-existing and new illnesses, which means that senior citizens with pre-existing conditions can also benefit from the scheme.
  4. No age limit: There is no upper age limit for beneficiaries under PMJAY, which means that senior citizens can also enroll in the scheme and avail of its benefits.
  5. Easy access to healthcare: PMJAY aims to provide easy access to healthcare services for all beneficiaries, including senior citizens. The scheme has a network of empanelled hospitals across the country, which ensures that beneficiaries can access quality healthcare services in their vicinity.

Who are eligible for PMJAY ?

Pradhan Mantri Jan Arogya Yojana (PMJAY), also known as Ayushman Bharat, is an entitlement-based scheme that provides health insurance coverage to the economically weaker sections of the society. Here are the eligibility criteria for PMJAY:

  1. Socio-Economic Caste Census (SECC) 2011 data: Eligibility for PMJAY is based on the deprivation and occupational criteria of the SECC 2011 data. The scheme covers families that are identified as deprived and vulnerable based on these criteria.
  2. Family income: PMJAY is targeted at families with an annual income of up to Rs. 1.5 lakhs. Families with income above this limit are not eligible for the scheme.
  3. Family size: PMJAY covers families with up to 5 members. This includes the head of the family, spouse, and up to three dependents.
  4. No age limit: There is no age limit for beneficiaries under PMJAY. This means that both children and senior citizens are eligible for the scheme.

It is important to note that the eligibility criteria for PMJAY may vary depending on the state and region. It is advisable to check the official website of PMJAY or contact your nearest Common Service Centre (CSC) to determine your eligibility for the scheme.

It is important to note that PMJAY is a government-sponsored scheme, and there is no fee to apply or enroll in the scheme.

It is important to note that the eligibility criteria for PMJAY may vary depending on the state and region. It is advisable to check the official website of PMJAY or contact your nearest Common Service Centre (CSC) to determine your eligibility for the scheme.

How to apply for PMJAY Benefits?

  1. Check eligibility status by visiting the official website of PMJAY or by contacting nearest Common Service Centre (CSC).
  2. Get enrolled: If eligible, the next step is to get enrolled in the scheme. This can be done by visiting the nearest empanelled hospital, CSC or Ayushman Mitra, who are trained professionals responsible for assisting beneficiaries in availing the benefits of the scheme. You will need to provide your Aadhaar card and other relevant documents to complete the enrollment process.
  3. Receive e-card: Once the enrollment is complete, applicant will receive an e-card, which will contain their personal details, including name, photo, and PMJAY identification number. This e-card will be used to avail of the benefits of the scheme.
  4. Avail of benefits: With the e-card, one can avail of cashless treatment at any of the empanelled hospitals across the country. You can also check the list of empanelled hospitals on the official website of PMJAY or by contacting Ayushman Mitra.

While Pradhan Mantri Jan Arogya Yojana (PMJAY) provides health insurance coverage for a wide range of medical conditions and treatments, there are certain exclusions to the scheme. Here are some of the key exclusions of PMJAY:

  1. Cosmetic procedures: PMJAY does not cover cosmetic procedures, such as plastic surgery, except in cases where the procedure is medically necessary due to a congenital defect or as a result of an injury or illness.
  2. Fertility treatments: PMJAY does not cover fertility treatments, including in vitro fertilization (IVF) and other assisted reproductive technologies.
  3. Organ transplants for non-dependent relatives: PMJAY does not cover organ transplants for non-dependent relatives, such as siblings or cousins.
  4. Psychiatric treatments: PMJAY does not cover psychiatric treatments, except in cases where the treatment is necessary due to a medical emergency or as a result of a physical illness.
  5. Outpatient care: PMJAY does not cover outpatient care, such as consultations, diagnostics, and procedures that do not require hospitalization.
  6. Unproven treatments: PMJAY does not cover unproven treatments, such as experimental or untested therapies that have not been approved by the government or professional medical bodies.

It is important to note that the above list is not exhaustive, and there may be additional exclusions based on specific circumstances and medical conditions. It is always advisable to check with the empaneled hospital or the National Health Authority (NHA) to determine whether a specific treatment or procedure is covered under PMJAY.

National Pension System: an agile scheme for new age

What is NPS Scheme, how to apply and maintain? what to do with maturity proceed? Pros and cons. Here is a complete low-down on the most coveted pension scheme in India

The National Pension System (NPS) was launched by the Government of India in 2004 for government employees. However, in 2009, it was opened to all Indian citizens on a voluntary basis, including private citizens. Private citizens could enroll in the NPS through Points of Presence (PoPs), which were authorized by the Pension Fund Regulatory and Development Authority (PFRDA).

Initially, only Tier-I accounts were available to private citizens, which are non-withdrawable accounts meant for retirement savings. Later, in 2011, the Tier-II accounts were also made available to private citizens, which are withdrawable accounts that can be used for short-term financial goals.

Since then, NPS has become a popular investment option for private citizens, with its low-cost structure, flexibility, and tax benefits. Private citizens can choose from different investment options, such as equity, debt, and government securities, based on their risk appetite and investment goals.

The NPS allows subscribers to accumulate a pension corpus during their working life and withdraw it upon retirement. Here’s how to withdraw the maturity amount and invest in an annuity:

  1. At the age of 60: When the subscriber reaches the age of 60, he/she can withdraw up to 60% of the corpus tax-free. The remaining 40% must be invested in an annuity plan. The annuity plan provides a regular pension income to the subscriber for the rest of his/her life. Now NPS scheme can be extended till 75 years of age for contribution.
  2. Before the age of 60: If the subscriber wishes to withdraw the corpus before the age of 60, he/she can do so only under certain conditions, such as critical illness or death. In such cases, up to 20% of the corpus can be withdrawn tax-free, and the remaining 80% must be used to purchase an annuity plan.

To invest in an annuity plan, the subscriber can choose from various annuity providers registered with PFRDA, such as Life Insurance Corporation (LIC) of India, SBI Life Insurance, HDFC Life, ICICI Prudential Life Insurance, etc. The annuity plan offers different options, such as a fixed pension for a lifetime, pension for a certain period, pension for the lifetime of the subscriber and spouse, etc.

Pros of NPS maturity and annuity:

  1. Tax benefits: The contributions made towards NPS are eligible for tax benefits under section 80C of the Income Tax Act. Additionally, the corpus accumulated and annuity received are also tax-exempt to a certain extent.
  2. Flexibility: NPS offers flexibility in terms of investment options and annuity providers. The subscriber can choose from various investment options, such as equity, debt, and government securities, based on his/her risk appetite. Similarly, the subscriber can choose from various annuity providers and annuity options to suit his/her requirements.
  3. Regular pension income: An annuity plan offers a regular pension income to the subscriber for the rest of his/her life. This ensures financial stability during retirement and eliminates the risk of outliving the retirement savings.

Cons of NPS maturity and annuity:

  1. Limited liquidity: NPS has a lock-in period until the subscriber reaches the age of 60. Even after that, only 60% of the corpus can be withdrawn tax-free, and the remaining 40% must be used to purchase an annuity plan. This limits the liquidity of the retirement savings.
  2. Annuity rates: The annuity rates offered by the annuity providers may not be attractive, leading to a lower pension income than expected.
  3. Market risk: NPS invests in various asset classes, such as equity, debt, and government securities, which are subject to market risks. This can result in fluctuations in the corpus accumulated and the pension income received.

he National Pension System (NPS) offers several annuity plans from different annuity service providers (ASPs).

  1. Life Annuity: The Life Annuity option provides a regular pension income for the rest of the subscriber’s life. The pension stops on the subscriber’s death, and there is no provision for the return of the purchase price. This plan is suitable for individuals who want a guaranteed income stream during retirement and do not want to worry about market fluctuations.
  2. Joint Life Annuity: The Joint Life Annuity option provides a regular pension income to the subscriber and his/her spouse for the rest of their lives. The pension stops on the death of both the subscriber and the spouse, and there is no provision for the return of the purchase price. This plan is suitable for individuals who want to ensure financial security for their spouse even after their death.
  3. Life Annuity with Return of Purchase Price: The Life Annuity with Return of Purchase Price option provides a regular pension income for the subscriber’s life, and on his/her death, the purchase price is returned to the nominee. This plan is suitable for individuals who want to ensure that their nominee gets the corpus on their death.
  4. Life Annuity with Guaranteed Period: The Life Annuity with Guaranteed Period option provides a regular pension income for the subscriber’s life, and in case of his/her death during the guaranteed period, the pension is paid to the nominee for the remaining guaranteed period. This plan is suitable for individuals who want to ensure that their nominee gets the pension for a certain period in case of their untimely death.
  5. Increasing Life Annuity: The Increasing Life Annuity option provides a regular pension income for the subscriber’s life, with an annual increase in the pension amount at a predetermined rate. This plan is suitable for individuals who want to ensure that their pension keeps pace with inflation and maintains their purchasing power.

It is advisable to compare the features, benefits, and rates of different annuity plans offered by the ASPs and choose the one that best suits the individual’s requirements.

SCSS: Why it’s a lucrative pension scheme for retired?

SCSS is a lucrative option for pension holders with tax benefits, higher interest rates and loan facilities. The government has recently increased the interest rates for the Senior Citizen Savings Scheme (SCSS) for the January-March quarter of FY2022-23 to 8%. Also, the investment limit has increased from Rs. 15 lakhs to Rs. 30 lakhs in the union budget 2023-24.

The Senior Citizen Savings Scheme (SCSS) is a government-backed savings scheme designed for senior citizens (individuals aged 60 years or above) in India. The scheme offers several benefits to senior citizens, including:

  1. High Interest Rates: The interest rate on SCSS is typically higher than most other savings schemes. As of March 2023, the current interest rate on SCSS is 8% per annum, which is subject to change as per government policies.
  2. Tax Benefits: Investments made in SCSS are eligible for tax benefits under Section 80C of the Income Tax Act, (as per old tax regime) up to a maximum limit of Rs. 1.5 lakh per year. Additionally, interest income earned from SCSS is taxable under the Income Tax Act, but senior citizens can claim a deduction of up to Rs. 50,000 per year under Section 80TTB of the Income Tax Act.
  3. Guaranteed Returns: The returns on SCSS are guaranteed by the government, which means that senior citizens can be assured of a fixed rate of return on their investment.
  4. Low Risk: SCSS is a low-risk investment option as it is backed by the government. It is a good option for senior citizens who want to invest their savings in a safe and secure instrument.
  5. Flexible Investment Amount: The minimum investment amount for SCSS is Rs. 1,000, and the maximum investment amount is Rs. 30 lakh. Senior citizens can invest any amount between these two limits in multiples of Rs. 1,000.
  6. Flexible Investment Tenure: The investment tenure for SCSS is five years, which can be extended for an additional three years. Senior citizens can also make premature withdrawals subject to certain conditions.

Increasing the investment limit to Rs. 30 lakhs would provide senior citizens with the opportunity to invest a higher amount of money in the scheme and earn a higher rate of interest while enjoying the safety and security of a government-backed investment option.

Loan facility in SCSS

a loan facility is available for Senior Citizen Savings Scheme (SCSS) account holders. Here are the key points to know about the loan facility:

  1. Eligibility: SCSS account holders can avail of a loan facility after completing one year from the date of account opening.
  2. Loan Amount: The maximum loan amount that can be availed is 50% of the account holder’s deposit amount.
  3. Interest Rate: The interest rate on the loan availed against SCSS is 1% higher than the interest rate payable on the SCSS deposit. So, if the SCSS interest rate is 8%, then the loan interest rate will be 9%.
  4. Repayment: The loan amount and interest are to be repaid in one lump sum, either at the end of the loan tenure or on the maturity of the SCSS account, whichever is earlier.
  5. Loan Tenure: The loan tenure is three years from the date of availing the loan. If the loan is not repaid within the stipulated time, then the outstanding loan amount will be recovered from the account balance at the time of maturity.
  6. Security: The SCSS account balance is the collateral for the loan availed. The account holder needs to execute a loan agreement and pledge the account balance to the bank or post office.
  7. Premature Closure: In case of premature closure of the SCSS account, the outstanding loan amount along with the accrued interest needs to be repaid before the account is closed.

Overall, the loan facility against SCSS is a useful option for senior citizens who may need funds during an emergency or for other purposes. However, it is important to remember that the interest rate on the loan is higher than the interest rate on the deposit, and the SCSS account balance is used as collateral for the loan. It is important to weigh the benefits and risks before availing of the loan facility.

PMVVY: an attractive pension scheme for senior citizen

Pradhan Mantri Vaya Vandana Yojana has gained popularity over past two years. However, as the scheme is new and has multiple layers to it. The common questions I am asked on Pradhan Mantri Vyay Vandan Yojana are as follows –

What is the benefit of Pradhan Mantri Vaya Vandana Yojana? Is PM Vaya Vandana Yojana still available? What is the interest rate of PMVVY? Who is eligible for PMVVY? What is the disadvantage of PMVVY? Lets look at the answers.

Pradhan Mantri Vaya Vandana Yojana

Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a pension scheme for senior citizens (age 60 years and above) launched by the Government of India in 2017. The scheme is implemented through the Life Insurance Corporation of India (LIC).

Under this scheme, senior citizens are provided with a guaranteed return of 8% per annum payable monthly for a policy term of 10 years. The scheme offers pensioners the option to choose their pension payout frequency as monthly, quarterly, half-yearly, or yearly. Additionally, the scheme also allows for premature withdrawal of the entire purchase price along with accrued interest after completion of three policy years in the event of critical or terminal illness of self or spouse.

To apply for PMVVY, you can visit any of the designated branches of Life Insurance Corporation of India (LIC) or any other channel through which LIC sells its products. The application form for PMVVY can also be downloaded from the LIC website and submitted along with the relevant documents at the nearest LIC branch office.

Advantages of PMVVY:

  1. Guaranteed returns: The scheme offers a guaranteed return of 8% per annum for a policy term of 10 years, providing financial security to senior citizens.
  2. Flexible payout options: The scheme offers pension payout options as monthly, quarterly, half-yearly, or yearly to suit the financial needs of the pensioner.
  3. Premature withdrawal option: In the event of critical or terminal illness of self or spouse, the scheme allows for premature withdrawal of the entire purchase price along with accrued interest after completion of three policy years.
  4. Loan Facility: The scheme also offers a loan facility after the completion of three policy years, which can be up to 75% of the purchase price.
  5. Death Benefit: In case of the demise of the policyholder, the purchase price is refunded to the nominee.

Disadvantages of PMVVY:

  1. Age limit: The scheme is available only to senior citizens who are 60 years or older, limiting its accessibility to younger individuals who may also require financial security in their old age.
  2. Limited policy term: The policy term of the scheme is limited to 10 years, which may not be sufficient for individuals who require a longer period of financial security.
  3. Low liquidity: The scheme does not offer easy liquidity as premature withdrawal is allowed only in case of critical or terminal illness of self or spouse after three policy years.

It is an attractive pension scheme for senior citizens in India, providing them with financial stability and peace of mind. One can apply for Pradhan Mantri Vaya Vandana Yojana (PMVVY) both online and offline through the Life Insurance Corporation of India (LIC) website or at any of its branches. Here’s how you can apply for PMVVY:

Online application process:

  1. Visit the LIC website (www.licindia.in) and click on the ‘Buy Policy Online’ option.
  2. Select ‘Pradhan Mantri Vaya Vandana Yojana’ from the list of policies and click on ‘Buy Now.’
  3. Fill in the required personal and policy details, and select the payment option.
  4. Once the payment is made, a confirmation message will be sent to your registered mobile number and email ID.
  5. The policy documents will be sent to your registered address.

Offline application process:

  1. Visit any LIC branch office and collect the PMVVY application form.
  2. Fill in the form with the required personal and policy details.
  3. Attach the necessary documents such as age proof, identity proof, address proof, and a passport-sized photograph.
  4. Submit the completed application form and documents at the LIC branch.
  5. Pay the premium amount through cash, cheque or demand draft.
  6. Once the payment is made, the policy documents will be issued.

Remember to read and understand the policy document carefully before applying for PMVVY, and to provide accurate information to avoid any complications in the future.

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