Govt hikes interest rate on Small Savings Schemes | PPF-SSY Interest Rate

Small Savings Schemes, PPF-SSY Interest Rate: The government has announced to increase the interest rate of some Small Savings Schemes for Q3 (from October 1 to December 31, 2022). In a memorandum released on September 29, the government increased the interest rate of the Senior Citizen Saving Scheme by 20 basis points (bps) i.e from 7.4 to 7.6, and Monthly Income Account Scheme by 10 bps i.e. from 6.6 to 6.7.

The rate of interest of Kisan Vikas Patra has also been increased by 10 bps from 6.9 to 7.0 and the maturity months have decreased by one month (earlier it was 124 months which is decreased to 123 months). The 2-year time deposit and 3-year time deposit with the post office’s interest rate were also increased by 20 bps from 5.5 to 5.7 and 30 bps from 5.5 to 5.8 respectively.

The interest rate of other schemes like the Public Provident Fund (PPF), Saving deposit scheme, National saving certificate, and Sukanya Samriddhi Yojana remained unchanged.

The Reserve Bank of India since May has raised the benchmark lending rate by 190 basis points, prompting banks to raise interest rates on deposits as well. The small savings interest rates are linked to market yields on government securities. In previous quarters, the small savings interest rates have been left unchanged despite a rise in the corresponding government bond yields. This is the first hike since May.

What are Small Saving Schemes?
Small savings schemes are designed to provide safe and attractive investment options to the public and at the same time mobilise resources for development.
The umbrella of small saving schemes includes saving deposits, post office deposits, public provident fund, senior citizen saving scheme, monthly income account scheme, Five-year recurring deposit scheme, National Saving Certificate, Kisan Vikas Patra and Sukanya Samriddhi Yojana.