Centre hiked the interest rates on small savings in select schemes as Sukanya Samriddhi Account Scheme


The Centre has hiked the interest rates on small savings in select schemes for the July-September quarter by 10 basis points to 30 basis points (bps) in line with the higher interest rates offered by banks.

The interest rates on Senior Citizen Savings Scheme (SCSS), Public Provident Fund (PPF), Kisan Vikas Patra (KVP) and Sukanya Samriddhi Account Scheme (SCSS) have been kept unchanged.

The rates rose the most by 30 basis points infive-year recurring deposits. During the second quarter of the current fiscal, RD holders will get 6.5 per cent against the existing 6.2 per cent, according to a finance ministry notification.

With the revision, a one-year term deposit with post offices will now earn 10 basis points more at 6.9 per cent and the two years tenor, 7 per cent up from 6.9 per cent.

The interest rates on term deposits for three years and five years have been retained at 7 per cent and 7.5 per cent, respectively.

The rates for the popular PPF and savings deposits are retained at 7.1 per cent and 4 per cent, respectively.

The rate on the National Savings Certificate (NSC) remained unchanged at 7.7 per cent.

The rate for the girl child savings scheme Sukanya Samriddhi also stood at the existing level of 8 per cent. The interest rate on the senior citizen savings scheme and Kisan Vikas Patra (KVP) was 8.2 per cent and 7.5 per cent, respectively.

Interest rates were increased in the last (January-March) quarter as well as the April-June quarter. Interest rates for small savings schemes are notified every quarter.

There is no increase in interest rate for Monthly Income Scheme, and this will earn 7.4 per cent for the investors.

The Reserve Bank since May has raised the benchmark lending rate by 2.5 per cent to 6.5 per cent, prompting banks to raise interest rates on deposits as well. The RBI has maintained the status quo on policy rate in the last two consecutive Monetary Policy Committee meetings. In the previous quarter, the rates were raised for most schemes by up to 70 basis points.

RBI report

The share of loans bearing over 9 per cent interest rate rose to 56.1 per cent in March 2023, in tandem with the monetary tightening measures starting May 2022, said a Reserve Bank report on Friday.

The Reserve Bank started raising interest in May 2022 to rein in inflation in the wake of global supply disruptions, following the Russia-Ukraine war. Since then the benchmark short-term lending rate has increased 250 basis points. However, the RBI did not raise the rate in its last two bi-monthly monetary policy reviews

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