Looking for safe returns? These 5 government-backed schemes offer over 7.5% interest

Several government-backed savings schemes in India currently offer annual interest rates of 7.5% or higher, according to the latest notified rates. These instruments are part of the government's savings framework, with interest rates reviewed and revised periodically.

These schemes vary in terms of tenure, eligibility criteria, and interest payout structure. Some are designed for specific groups, such as senior citizens or girl children, while others are open to all investors. These options are particularly popular among conservative or risk-averse investors because they offer tax benefits on deposits, on maturity, or on both.

Here are the top five government-backed investment options that offer at least 7.5% interest rate to their investors.

Senior Citizens' Savings Scheme (SCSS)

The scheme, designed for senior citizens, currently offers an interest rate of 8.2% per annum. The minimum deposit required is ₹1,000 in multiples of 1,000 thereafter, while the maximum limit across all SCSS accounts held by an individual is ₹30 lakh.

The account matures after 5 years from the date of opening, with the option to extend for an additional 3 years. Premature closure of the account is permitted under specific conditions.

Here's who can apply for the scheme:

• Individuals aged 60 years or above at the time of opening the account
• Individuals aged 55 to 60 years who have retired under superannuation, VRS, or special VRS.
• Retired defence personnel (excluding civilian defence employees) aged 50 years or above, subject to specified conditions.

Sukanya Samriddhi Yojana (SSY)

The scheme is designed for a girl child and offers an interest rate of 8.2% per annum to its depositors. It also provides tax-free maturity benefits, and under the old tax regime, deposits up to ₹1.50 lakh in a financial year are eligible for tax deductions.

The minimum deposit under the scheme is ₹250 per financial year, while the maximum is ₹1.50 lakh per financial year.

The account matures after 21 years from the date of opening or at the time of the girl child's marriage, whichever is earlier. Contributions are required for the first 15 years, while the accumulated amount continues to earn compound interest until maturity.

National Savings Certificate (NSC)

The government-backed scheme offers an interest rate of 7.7% per annum, compounded annually, with interest payable at maturity after five years. The minimum deposit is ₹1,000, and thereafter, in multiples of 100, with no maximum investment limit.

An account can be opened by an adult individually or on behalf of a minor, while minors aged 10 years and above can also open an account in their own name. The scheme also provides a loan facility through bank pledging.

Kisan vikas patra (KVP)

This is a government-backed savings scheme offered by India Post that allows investors to double their investment in 115 months (9 years and 5 months). It is a low-risk savings instrument designed to encourage long-term savings by offering guaranteed returns with annual compounding.

Under the current rules, KVP offers an interest rate of 7.5% per annum, with a minimum investment of ₹1,000 and no maximum limit, according to information available on ClearTax.

To prevent money laundering, the government made PAN card proof compulsory for investments above ₹50,000 in 2014. For deposits of ₹10 lakh and above, you must submit income proofs such as salary slips, bank statements, and ITR documents, among others.

RBI floating rate bond

The Reserve Bank of India (RBI) floating rate bond currently offers an interest rate of 8.05% per annum. It is considered one of the safest investment options for many investors with a low-risk appetite.

The bond has a 7-year maturity and carries a sovereign guarantee, with no upper investment limit. It is open to resident individuals and offers interest payouts at regular intervals.

It also offers a higher rate compared to fixed deposit (FD) schemes of many public sector undertakings (PSUs) and private sector banks.

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.