The Special Deposit Scheme is a financial program allowing depositors to place their funds in a specialized account, often with favorable interest rates and specific terms. Designed for savings and investment, it provides a secure way to grow money while sometimes offering tax benefits or government-backed guarantees.
The Finance Ministry has said that deposits made under the Special Deposit Scheme (SDS) for non-government provident, superannuation and gratuity funds would earn 7.1 per cent interest from July 1 to September 30. The rates remain unchanged from the April-June quarter.
The interest rate on SDS is a major factor influencing declaration of rate of interest on the Employee Provident Fund (EPF). This is because nearly 80 per cent of EPF corpus stands invested in the SDS.
SDS is a scheme in which the non-government provident funds like EPFO invest.
“It is hereby notified that the deposits made under the Special Deposit Scheme for non-government provident, superannuation and gratuity funds, announced in the Ministry of Finance (Department of Economic Affairs) Notification ..dated June 30, 1975, shall with effect from July 1, 2024, to September 30, 2024, bear interest at 7.1 per cent. This rate will be in force w.e.f July 1, 2024,” said a notification issued on Wednesday by the Department of Economic Affairs in the Finance Ministry.
Investment avenue
The SDS of 1975, introduced by the Government of India, was designed to provide a secure and stable investment avenue for provident funds, particularly those managed by both public and private sector employers.
This scheme was established to ensure that the accumulations in these provident funds earned a guaranteed return, thereby securing the financial future of employees.
During its inception, the Indian economy was navigating through various financial challenges, and there was a pressing need to offer secure investment channels that could instil confidence among investors.
Over the years, the scheme has evolved, with the government adjusting the interest rates and other terms to align with the broader financial and economic landscape.
Guaranteed return
One of the scheme’s main attractions is its guaranteed rate of return. This feature has consistently made the SDS 1975 an appealing option for provident fund trustees seeking safe investment with predictable returns.
The SDS is backed by the Government of India, which significantly reduces the investment risk. This backing provides a high degree of security to the invested principal amount.
The interest rates for SDS 1975 deposits are periodically revised by the government. These revisions ensure that the returns remain competitive and reflective of the prevailing economic conditions.
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