Interest rates on small savings schemes remain unchanged

The government-run small savings schemes remained to provide the same interest rates since the past two years though the bank fixed deposit rates have considerably increased the interest rate.

The small savings schemes’ interest rates were last revised in the first quarter of 2020-21, though banks have drastically hiked their home loan and term deposit rates after the Reserve Bank of India (RBI) raised its repo rate by 140 basis points since May 2022.

Small savings schemes like Public Provident Fund (PPF), National Savings Certificate (NSC), Post Office Savings Scheme and Sukanya Samriddhi Yojana are vital savings instruments for the common man, as they provide long-term benefits.

Here are the current interest rates of key small savings schemes:

* Public Provident Fund (PPF): 7.1 per cent

* National Savings Certificate (NSC): 6.8 per cent

* Post Office Monthly Income Scheme: 6.6 per cent

* Sukanya Samriddhi Yojana: 7.6 per cent

* Five-year Senior Citizens Saving Scheme: 7.4 per cent

* Kisan Vikas Patra: 6.9 per cent

The RBI had brought down its benchmark repo rate by 75 basis points to 4.40 per cent on March 27, 2020 — just three days after a nationwide lockdown was announced but the government had not reduced interest rates of small savings schemes, keeping in mind the interests of the pensioners.

RBI sources said the government will monitor inflation as well as the liquidity position before taking any decision to raise interest rates of small savings schemes. “Depending on how much inflation rises and whether there is tightening of liquidity position in future, the government may take a call on small savings schemes rates,” said a senior banking official told IANS.

On June 30, 2022, the Finance Ministry had notified that interest rates of small savings schemes have been kept unchanged for the July-September quarter of the current fiscal, effective from July 1.

“The rates of interest on various small saving schemes for the second quarter of the financial year 2022-23, starting July 1, and ending September 30, shall remain unchanged from those notified for the first quarter (April 1 to June 30) for FY 2022-23,” the Finance Ministry notification had said.