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How are risk-free investments regulated by the government?

Curious about risk-free investment

How are risk-free investments regulated by the government?

In India, riskfree investments are regulated by the government through various financial regulators such as the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), and Insurance Regulatory and Development Authority of India (IRDAI), among others. The government regulates the interest rates on riskfree instruments like government bonds, fixed deposits in banks, and post office savings schemes. These interest rates are subject to change depending on economic conditions and monetary policies.

The government also provides various tax benefits on certain riskfree investments to encourage individuals to save and invest for their future. For example, investments in taxsaving fixed deposits, Public Provident Fund (PPF), National Savings Certificate (NSC), and Sukanya Samriddhi Yojana (SSY) are eligible for tax deductions under Section 80C of the Income Tax Act, 1961.

Moreover, the government also guarantees the safety of some riskfree investments such as bank deposits and post office savings schemes. The Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the RBI, insures bank deposits up to Rs. 5 lakhs per depositor per bank, providing an additional layer of protection to investors.

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