Govt hikes small savings interest rates: Check new NSC, Sukanya Samriddhi Scheme and Post Office Deposit scheme interest rates

The government has hiked the interest rates on small savings schemes by up to 30 bps for the July-September 2023 quarter for the tenures of one year and two years. However, the interest rate on the Public Provident Fund (PPF) and senior citizen savings scheme (SCSS) have not been changed and been kept unchanged at 7.1 per cent and 8.2 per cent respectively.

As per the recent notification issued by the Union Finance Ministry today, the government has increased the interest rate for 1-year, 2-year, from 6.8 per cent, 6.9 per cent, in the last quarter to 6.9 per cent, 7.0 per cent, respectively.

The interest rates on small savings schemes are reviewed every quarter by the government. Small savings schemes include savings deposits ranging from 1 year to 5 year tenure along with SCSS, monthly income account scheme, national savings certificate, kisan vikas patra, etc.

The interest rates of small savings schemes are linked to yields of Government Securities (G-Secs). The Finance Ministry reviews the interest rates of small savings schemes every quarter of a financial year, on the basis G-Secs yields of the previous three months.

The interest rates of most of the small savings schemes are currently at par with fixed deposit interest rates offered by the scheduled commercial banks. Further, in view of RBI’s repo rate hike pause and falling inflation, experts believed there was not much room for an upward revision of the SCSS interest rate.

Earlier, SCSS account holders were expecting a further hike in the interest rate. However, a fresh hike was unlikely as the SCSS interest rate was increased in the last two quarters. This is the fourth time in the last 12 months that the Centre has increased the interest rates on small savings schemes.