Interest rates on small savings schemes, including PPF, NSC, KVP and post office deposits, are going to be revised for the October-December 2023 quarter this week on September 30. As the rates are decided on the basis of G-Sec yields of the previous quarter (July-September 2023 in this case), experts said the interest rates on small savings schemes are unlikely to be changed for October-December 2023.
Interest rates on small savings schemes are reviewed at the end of every quarter and are decided for the next quarter accordingly.
Paras Jasrai, senior analyst at India Ratings & Research, said, “Interest rates on small savings schemes are decided on the previous quarter’s trend of G-Sec (government securities) yield. The 10-year G-Sec has ranged between 7.0 per cent and 7.2 per cent in the current fiscal so far, and is expected to be around 7.1 per cent-7.2 per cent going forward. Inflation is expected to be in the range of 5-6 per cent post September 2023. So, the interest rates on small savings schemes are likely to be unchanged.”
Currently, interest rates on small savings schemes range between four per cent (post office savings deposits) and 8.2 per cent (Senior Citizens Savings Scheme or SCSS). PPF offers an interest rate of 7.1 per cent per annum.
According to a livemint report, Amit Gupta, MD, SAG Infotech, said the finance ministry may keep the ongoing interest rate for Public Provident Fund (PPF) accounts at 7.10 per cent yearly for the October-November quarter, as of September 2023.
According to a CNBC-TV18 report, Adhil Shetty, CEO of BankBazaar, said any of the small savings schemes, including SCSS, were not marked to the market during the COVID years, and the rates were much higher than the markets. However, with the rate hikes in the last year, the interest rates on small savings schemes are currently at par with long-term fixed deposits (FDs).
“The Reserve Bank of India (RBI) has also paused rate hikes since April, and with inflation slowly easing up globally, the expectation is that the repo rate would hold. So, there’s little to no headroom for an upward revision, and the chances of a significant rate hike in SCSS are unlikely at this point,” Shetty added.
In the last review on June 30, 2023, the government hiked interest rates on several small savings schemes — 1-year & 2-year post office time deposits and 5-year recurring deposits. It was the fourth hike since September 2022, when the government raised interest rates on some small savings schemes for the October-December 2022 quarter, after keeping it unchanged for nine consecutive quarters — from the second quarter of 2020-21 to the second quarter of 2022-23.
Current Interest Rates On Small Savings Schemes?
The interest rates for the current quarter July-September 2023 are as follows:
- Savings Deposit: 4 per cent
- 1-Year Post Office Time Deposits: 6.9 per cent
- 2-Year Post Office Time Deposits: 7.0 per cent
- 3-Year Post Office Time Deposits: 7 per cent
- 5-Year Post Office Time Deposits: 7.5 per cent
- 5-Year Recurring Deposits: 6.5 per cent
- National Saving Certificates (NSC): 7.7 per cent
- Kisan Vikas Patra: 7.5 per cent (will mature in 115 months)
- Public Provident Fund: 7.1 per cent
- Sukanya Samriddhi Account: 8.0 per cent
- Senior Citizens Savings Scheme: 8.2 per cent
- Monthly Income Account: 7.4 per cent.
Small savings schemes have three categories — savings deposits, social security schemes and monthly income plan.
Saving deposits include 1-3-year time deposits and 5-year recurring deposits. These also include saving certificates such as National Saving Certificates (NSC) and Kisan Vikas Patra (KVP). Social security schemes include Public Provident Fund (PPF), Sukanya Samriddhi Account and Senior Citizens Savings Scheme. The monthly income plan includes the Monthly Income Account.
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