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One-minute guide to understanding | National savings certificate

One-minute guide to understanding | National savings certificate
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First Published: Sun, Mar 21 2010. 08 43 PM IST

Updated: Sun, Mar 21 2010. 08 43 PM IST
0-15 seconds
What am I?
I am a zero-risk guaranteed return investment and am provided by the government of India. You can buy me from any local post office in India or from an authorized agent.
15-30 seconds
How do I work?
You can earn an 8% interest rate on me, which is compounded six monthly but payable only at maturity. This means that if you buy me for Rs100, I will grow to Rs160.10 after six years. You have to shell out a minimum of Rs100 to buy me, but there is no maximum limit. I am available in the denominations of Rs100, Rs500, Rs1,000, Rs5,000 and Rs10,000. You also get section 80C tax deduction benefit by investing in me.
30-45 seconds
Who can buy me?
I can be bought by an adult, two adults jointly, or by an adult on behalf of a minor. I can also be bought and gifted to a minor.
45-60 seconds
Red flags about me
You can’t rely on me during an emergency. I am low on liquidity as your money remains locked with me for six years. Premature withdrawals are permitted only under specific circumstances, such as the death of the holder(s), forfeiture by the nominee, or under a court’s order. Also, the interest you earn from me is taxable. However, the interest can also be treated as an 80C contribution.
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First Published: Sun, Mar 21 2010. 08 43 PM IST