Interest rates on small savings schemes are also likely to be revised upwards for the January-March 2023 quarter amid the rising interest rates in the country
Small savings schemes, which include public provident fund (PPF), National Saving Certificates (NSC) and Kisan Vikas Patra, are going to see a revision in their interest rates at the end of this month. The rates are revised every quarter. Now, as the RBI has raised the repo rate by 225 basis points this year, the FD interest rates have also risen and become attractive. In view of this, the interest rates on small savings schemes are also likely to be revised upwards for the January-March 2023 quarter amid the rising interest rates in the country.
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What Are Small Savings Schemes?
These are savings instruments managed by the government to encourage citizens to save regularly. The 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. Social security schemes include Public Provident Fund, Sukanya Samriddhi Account and Senior Citizens Savings Scheme. The monthly income plan includes the Monthly Income Account.
Latest Interest Rates On Small Savings Schemes
For the ongoing quarter, interest rates were revised upwards for Kisan Vikas Patra (KVP), senior citizens savings scheme, monthly income account scheme, and time deposits for two and three years. The rates were increased in the range of 10-30 basis points.
Interest rates on other schemes including public provident fund, savings deposits, National Savings Certificates and Sukanya Samriddhi Account Scheme remain unchanged.
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The post office savings deposits now offers an interest rate of 4 per cent per annum. Time deposits of the 1-year tenure offer 5.5 per cent interest rate. Interest on 2-year tenure deposits was raised by 20 basis points and now stands at 5.7 per cent, and that on 3-year tenure has been raised by 30 basis points and stands at 5.8 per cent. Five-year time deposits give a return of 6.7 per cent a year. Five-year recurring deposits can earn 5.8 per cent a year of interest.
National Saving Certificates (NSC) and Sukanya Samriddhi Account offers interest rates of 6.8 per cent and 7.6 per cent, respectively. The interest rate for PPF currently stands at 7.1 per cent.
For October-December 2023, the government revised both interest rates and tenure for Kisan Vikas Patra. It now offers 7 per cent for the maturity period of 123 months, compared with the earlier 6.9 per cent for the maturity period of 124 months. The monthly income account is offering 6.7 per cent per annum interest, against 6.6 per cent earlier.
On December 7, the RBI increased the repo rate by 35 basis points to 6.25 per cent, the fifth-time increase in a row. In the past five subsequent monetary policy reviews since May this year, the RBI’s rate-setting panel has raised 225 basis points in total. The repo rate is the interest rate at which the RBI lends to the commercial bank.
