The government has not changed interest rates on small savings schemes for two years. It last revised them in early 2020-21. This is despite banks drastically hiking their home and deposit rates. These hikes followed the RBI’s 140 basis point repo rate increase since May 2022.
Schemes like PPF, NSC, and Sukanya Samriddhi are vital for the common man. They provide important long-term benefits.
Banks have raised their term deposit and home loan rates since May 2022. Therefore, the unchanged small savings rates are a surprise.
Banking sources noted that deposit rates were cut during the 2020 pandemic. Both the RBI and banks reduced them.
The RBI cut its repo rate by 75 points to 4.40% on March 27, 2020. This was just three days after the PM announced a national lockdown. The goal was to provide public relief.
At that time, the government did not cut small savings rates. Sources say it wanted to protect depositors, especially pensioners.
A bank official explained the current strategy. During the pandemic, the RBI cut rates but small savings rates stayed. Now, the government is keeping them unchanged even as repo rates rise. This counters the rising interest burden.
Sources also said the government will watch inflation and liquidity. A decision on raising rates will come later.
A senior official said future rate changes depend on inflation and liquidity.
On June 30, 2022, the Finance Ministry made its decision. It kept rates for small savings schemes unchanged for the July-September quarter. This was effective from July 1.
The Ministry’s notification stated that rates for the second quarter of FY 2022-23 would remain the same as the first quarter.
Here are the current interest rates of some key small savings schemes:
The current interest rates for key small savings schemes are as follows. The Public Provident Fund (PPF) offers a return of 7.1 per cent, while the National Savings Certificate (NSC) provides 6.8 per cent. For those seeking regular income, the Post Office Monthly Income Scheme yields 6.6 per cent.
The Sukanya Samriddhi Yojana, designed for the girl child, has the highest rate at 7.6 per cent. The Savings Scheme is available to investors aged 60 and above and offers a return of 7.4 per cent. Finally, the Kisan Vikas Patra provides a return of 6.9 per cent.
