According to a Friday circular issued by the finance ministry, the government has increased interest rates on small savings programs by up to 70 basis points. These programs include the Senior Citizen Savings Scheme (SCSS), National Savings Certificate (NSC), and post office time deposit.
As per the round, the most elevated loan fee climb was made in the NSC from 7% to 7.7 percent now, while Public Opportune Asset (PPF) and reserve funds stores saw no change. For the months of April through June of 2023, the interest rates on 5-year post office deposits were increased by 50 basis points to 7.5%.
According to a statement issued by the finance ministry, while the interest rates for the well-known PPF and savings deposits have remained unchanged at 7.1% and 4%, other saving schemes have seen increases ranging from 0.1% to 0.7%.
The Sukanya Samriddhi girl child savings program now has a new interest rate of 8%, up from 7.6%.
The interest rate on Kisan Vikas Patra will be 7.5% in June 2023, and the loan will be paid off in 115 months. It was 7.2% earlier and had a 120-month maturity earlier in the March 2023 quarter.
In order to encourage citizens to save regularly, the government manages Small Savings Schemes. The little reserve funds plans have three classifications — reserve funds stores, federal retirement aide plans and month to month pay plan.
There are time deposits of one to three years and recurring deposits of five years for saving money. National Savings Certificates (NSC) and Kisan Vikas Patra (KVP) are two examples of these. The Public Provident Fund (PPF), Sukanya Samriddhi Account, and Senior Citizens Savings Scheme are examples of social security programs. The Monthly Income Account is a component of the monthly income plan.
| Sl. no | Instruments | Rate of Interest April 1, 2023-June 30, 2023 |
Compounding frequency |
|---|---|---|---|
| 1 | Post Office Savings Account |
4.00% | Annually |
| 2 | 1-Year Time Deposit | 6.8% | Quarterly |
| 3 | 2-Year Time Deposit | 6.9% | Quarterly |
| 4 | 3-Year Time Deposit | 7.0% | Quarterly |
| 5 | 5-Year Time Deposit | 7.5% | Quarterly |
| 6 | 5-Year Recurring Deposit Scheme | 5.8% | Quarterly |
| 7 | Senior Citizen Savings Scheme | 8.2% | Quarterly and Paid |
| 8 | Monthly Income Account | 7.4% | Monthly and Paid |
| 9 | National Savings Certificate (VIII Issue) | 7.7% | Annually |
| 10 | Kisan Vikas Patra | 7.5 (will mature in 115 months) | Annually |
| 11 | Sukanya Samriddhi Account Scheme | 8.0% | Annually |
The most recent quarter also saw an increase in interest rates. Small savings plans receive quarterly notifications of interest rates.
Since May, the benchmark lending rate has increased by 2.5% to 6.5%, prompting banks to increase deposit interest rates as well.
Last month, the RBI increased the repo rate, also known as the short-term lending rate, by 25 basis points. After an increase of 40 basis points in May and increases of 50 basis points in June, August, and September, this was the sixth rate increase in a row. On the whole, the RBI has raised the benchmark rate by 2.5 percent since May a year ago.
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