The government launched the Senior Citizen Savings Scheme (SCSS) in 2004 to ensure financial security in old age. The scheme provides an annual interest of 8.2 per cent on the deposit amount, paid quarterly until maturity, to ensure regular income for senior citizens. SCSS offers the highest interest rates among other government-backed small savings schemes.

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Similarly, banks also provide a senior citizen savings account for people aged 60 and above. However, its purpose is different from that of an SCSS scheme.

Here are the key differences between the two. 

Senior Citizen Savings Scheme (SCSS):

– SCSS is a five-year government-backed savings scheme that provides assured returns to seniors.

– It allows deposits in a lumpsum; the minimum amount is Rs 1,000, and the maximum is Rs 30 lakh.

– SCSS functions like a five-year fixed deposit (FD) with quarterly interest payments.

– It allows extensions in blocks of three years indefinitely after the initial five years or maturity.

– SCSS deposits are eligible for tax deductions of up to Rs 1.5 lakh in a financial year under Section 80C of the Income-tax Act, 1961.

– One can open an account in designated banks and post offices authorised by the Reserve Bank of India (RBI).

On the other hand, a senior citizen savings account operates as a regular savings account.

Senior Citizen Savings Account:

As per RBI’s September 2013 list, 26 banks, mostly public sector banks, provide the account.

The benefits of the account vary from one bank to another. For instance, HDFC Bank offers free insurance coverage up to Rs 50,000 annually for hospitalisations due to accidents, debit cards, higher FD rates, and other exclusive offers. However, to avail of the insurance coverage, the account holder must use the bank’s debit card at least once every six months.

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Likewise, the Bank of Baroda provides the “Senior Citizen Privilege Scheme”, which includes up to 25 per cent waiver of locker charge, free annual maintenance of a demat account in the first year, higher interest on flexi deposits, and a 50 per cent waiver on reverse mortgage fee.

Similarly, Kotak Mahindra Bank offers the “Grand-Savings Account” for people aged 55 and above. The benefits include a waiver of charges for not maintaining a minimum balance, a one-year subscription to GetSetUp, a virtual community for senior citizens for activities like yoga, dancing, acting, etc., and a discount on locker rentals.

Axis Bank offers the “Senior Privilege Savings Account” for seniors, which provides higher FD rates and discounts on healthcare services such as diagnostics, pharmacies, etc.

Many other banks also offer savings accounts for seniors with special benefits. Unlike the SCSS scheme, these accounts do not have a lock-in period but do not offer tax benefits. The SCSS and senior savings account have their advantages but don’t get confused between them.