Where should my mother invest her Rs 12 lakh?

My mother is an 78 years old state pensioner. She has Rs 12 lakh in her savings account. She has no major goal left in her life. Ultimately, she has to gift the money to her grandchildren aged 18 and 12 years. We want to know where to dump this money instead of leaving it idle in savings bank account.
--Tridib Phukan

You can consider investing in arbitrage funds or debt mutual fund schemes. Arbitrage funds look to exploit arbitrage opportunities between cash and derivative markets. They are treated as equity funds for taxation. Investments in arbitrage funds held over a year qualify for long-term captial gains tax whcih is zero currently. Debt mutual funds offer a host of options to you. If you want an alternative to savings bank account, you may consider investing in a liquid fund or ultra short-term scheme. If you want to invest for a little longer, you may consider short-term schemes.

For more, read: Know your debt mutual funds better