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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Comparison of Products Across Categories

Caselet: Mrs. Sen, a retired 62-year-old, wants regular income with capital safety and is comparing the Senior Citizens' Savings Scheme (SCSS) with a hybrid equity-oriented mutual fund's systematic withdrawal plan. Which statement best supports recommending SCSS for her core income need?

SCSS suits her core income need because it is government-backed and pays interest quarterly at a notified rate, giving predictable income and capital safety. A hybrid equity fund SWP depends on market-linked NAV, so neither the income amount nor the capital is assured.

  1. ASCSS is a government-backed scheme with interest paid quarterly at a notified rate, giving predictable income, whereas fund withdrawals depend on market-linked NAVCorrect
  2. BSCSS returns are linked to equity markets, giving higher growth potential
  3. CSCSS has no lock-in and unlimited deposit size
  4. DSCSS interest is fully exempt from income tax

Explanation

SCSS is a sovereign-backed scheme with a notified rate and quarterly interest payouts, so income is predictable. It has a five-year tenure and a deposit cap, and its interest is taxable, with TDS applicable above a threshold. The equity-oriented fund's value fluctuates, so an SWP does not guarantee capital safety.

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