National Savings Certificate:
There are several investment options available today that extend
a varied range of features and benefits. This allows individuals
to pick an investment option that matches the requirement and
financial goal of different types of investors.
NSC or National Savings Certificate is one of such investment
option that helps investors to generate substantial earnings.
Regardless, to make the most of this investment option,
individuals must find out about its features, benefits, and
limitations in detail to make an informed decision.
National Savings Scheme – In A Nutshell:
Essentially, NSC is a fixed income investment
option. It is an initiative of the Government of India to
encourage the citizens of India to mobilise small savings and
avail tax benefits.
Individuals can open this scheme at a post office in any
of these three ways –
- In their own name
- On behalf of a minor
- Jointly with an adult
NSC in India serves as a useful tool for generating a steady
income while exposing investors to limited risks. The best thing
about a National Savings Certificate is that it
provides guaranteed interest and capital protection.
Eligibility Criteria Of NSC:
Typically, any Indian resident can become a beneficiary of the
National Savings Scheme. However, if you belong to any of these
categories, you will not be able to open an
- Private limited companies
- Public limited companies
Individuals need to submit these documents to support their
eligibility and initiate the process of opening
NSC – application form, PAN, Voter ID,
driving license, passport, government or senior citizen ID,
Features And Associated Benefits:
These are among the most significant characteristics of
NSC in India –
NSC helps individuals earn a steady income over
the term of investment and also generates assured interest. This
makes it an ideal investment option from the point of view of
returns. Moreover, the fact the Government of India backs NSC
makes it safer than most investment instruments.
Individuals can start NSC in India with a
minimum amount of Rs. 100. This makes the savings scheme an
affordable investment option. On the other hand, there is no
upper limit for investing in it; this means you can park your
money into the scheme as and when required.
The rate of interest accompanying NSC is revised periodically by
the Government of India. Moreover, it gets compounded on an
annual basis but is paid out on maturity. In case, investors
decide to withdraw within a year of the issuance of NSC; they
will not be entitled to receive interest.
Moreover, post maturity if an investor does not redeem the NSC,
he/she will earn interest on it for another 2 years. However,
the same is offered at the rate of interest applicable to the
National Savings Certificate comes with a
lock-in period of 5 years, which the individuals cannot exit,
before completing 5 years. As a result, investors cannot
withdraw prematurely from this scheme, unless under exceptional
Collateral And Nomination Facility
Leading financial institutions accept NSC as
collateral for secured loans and help investors avail required
financial assistance. The savings scheme also offers the
nomination facility to the investors; wherein, one can nominate
any one member of their family.
Once the interest earned on the National Savings Certificate
gets compounded, the amount is reinvested by default. This helps
to accelerate the savings significantly over the term of
Individuals with an investment of Rs. 1.5 lakh in
NSC are entitled to claim tax rebate as per the
Section 80C of the Income Tax Act.
You must note that NSC has its share of
limitations as well, and one must become familiar with them to
make an informed decision.
Limitations Of NSC:
These pointers highlight the limitations of
- It does not offer inflation-adjusted returns.
The process of redeeming NSC before the maturity date is quite
Premature withdrawals are allowed only in case of death,
forfeiture by the pledgee or other special conditions.
Losing the physical copy of the
National Savings Certificate complicates the
process of redeeming it on maturity.
Individuals have to wait for a long time to access the funds
accumulated through this savings scheme.
Nevertheless, investors who intend to park their money in a safe
and profitable investment option may invest in Blue Chip company
invoices through KredX.
Doing so, individuals will be able to generate steady earnings
within a short period through our online portal, without being
exposed to substantial investment-oriented risks. However,
before choosing any investment option, including
National Savings Certificate, one must identify
their financial requirement and risk appetite.