Small savings schemes’ interest rates: Centre raises interest rates by up to 70 bps for April-June 2023 quarter, PPF rates unchanged
The Centre on Friday hiked the interest rates of small savings schemes by up to 70 bps for the April-June 2023 quarter. In a notification issued on Friday, the finance ministry said that the interest rates of schemes like the Senior Citizen Savings Scheme, Monthly Income Savings Scheme, National Savings Certificate, Kisan Vikas Patra, and Sukanya Samriddhi Account Scheme have been revised. Only the interest rates on the Public Provident Fund (PPF) and Post Office Savings Account have been kept unchanged.
This is the third time in the last 9 months, the Centre has increased the interest rates on small savings schemes. At present, the interest rates on small savings schemes range from 4.0 per cent to 8.2 per cent.
Interest rates at a glance
As per the notification issued by the Union Finance Ministry, the government has increased the interest rate for 1-year, 2-year, 3-year, 5-year term deposits from 6.6 per cent, 6.8 per cent, 6.9 per cent, 7.0 per cent in the last quarter to 6.8 per cent, 6.9 per cent, 7.0 per cent, and 7.5 per cent, respectively.
Besides this, it has also increased the interest rate for Senior Citizens’ Savings Scheme, Monthly Income Scheme, National Savings Certificate from 8 per cent, 7.1 per cent, 7.0 per cent to 8.2 per cent, 7.4 per cent, and 7,7 per cent, respectively.
The interest rates for Post Office Recurring Deposit, Kisan Vikas Patra (KVP), Sukanya Samriddhi Yojana have been hiked from 5.8 per cent, 7.2 per cent (123 months), 7.6 per cent to 6.2 per cent, 7.5 per cent (115 months), 8.2 per cent for the Q1 FY24, respectively.
| Savings Scheme | Interest rate Oct-Dec | Interest rate Jan-March | Interest rate Apr-June |
| Post Office Savings Account | 4.00% | 4% | 4% |
| Post Office Recurring Deposit | 5.80% | 5.8% | 6.2% |
| Post Office Monthly Income Scheme | 6.70% | 7.1% | 7.4% |
| Post Office Time Deposit (1 year) | 5.50% | 6.6% | 6.8% |
| Post Office Time Deposit (2 years) | 5.70% | 6.8% | 6.9% |
| Post Office Time Deposit (3 years) | 5.80% | 6.9% | 7.0% |
| Post Office Time Deposit (5 years) | 6.70% | 7.0% | 7.5% |
| Kisan Vikas Patra (KVP) | 7% (123 months) | 7.2% (123 months) | 7.5% (115 months) |
| Public Provident Fund (PPF) | 7.10% | 7.1% | 7.1% |
| Sukanya Samriddhi Yojana | 7.60% | 7.6% | 8.0% |
| National Savings Certificate | 6.80% | 7.0% | 7.7% |
| Senior Citizens’ Saving Scheme (SCSS) | 7.60% | 8.00% | 8.2% |
Only the interest rates on the Public Provident Fund (PPF), Post Office Savings Account have been kept unchanged at 7.1 per cent, 4 per cent, respectively.
Post office savings account offers one of best interest rates in comparison to the public sector banks. While Post office savings account is offering 4 per cent per annum, SBI is offering 2.70 per cent ayear interest rate on its savings account. ICICI Bank is offering 3-3.5 per cent per annum, whereas HDFC Bank is also offering 3-3.5 per cent per annum.
The interest rates of small savings schemes, which are backed by the Central government, depend on the market yields on government securities. The interest rates are calculated on the recommendations of the Shyamala Gopinath Committee, which suggested that the interest rates of different schemes should be 25-100 bps higher than the yields of government bonds of similar maturity.
Interest rate hikes in the last quarter
In the January-March period, the Centre hiked the interest rates on some of the small savings schemes. The government increased the interest rate for 1-year, 2-year, 3-year, 5-year term deposits. Besides this, it has also increased the interest rate for the Senior Citizens’ Savings Scheme, Monthly Income Scheme, and the National Savings Certificate.
The interest rates for government-backed small savings schemes, like Public Provident Fund (PPF), and Sukanya Samriddhi Yojana (SSY), were not revised for the January-March quarter.
Savings deposit 4.0%
One-year time deposit 6.6%
Two-year time deposit 6.8%
Three-year time deposit 6.9%
Five-year time deposit 7.0%
Five-year recurring deposit 5.8%
Senior Citizen Savings Scheme 8.0%
Monthly Income Account 7.1%
National Savings Certificate 7.0%
Public Provident Fund Scheme 7.1%
Kisan Vikas Patra 7.2%
Sukanya Samriddhi Account Scheme 7.6%
Interest rate hikes for Oct-Dec 2022
In September 2022, the Centre increased the interest rates of these small savings schemes by 10-30 basis points for the October-December quarter after keeping it unchanged for more than two years.
The government had kept the interest rates of these schemes higher despite lower yields on government securities in the reference period.
In September, the government increased the interest rates on two-year time deposits to 5.7 per cent, three-year deposits to 5.8 per cent, Senior Citizens Savings Scheme (SCSS, 7.6 per cent), monthly income account (6.7 per cent), and Kisan Vikas Patra (7 per cent).
Rates on schemes like the Public Provident fund, Sukanya Samriddhi Yojana, and National Savings Certificate were kept unchanged.