The central government has announced to increase in the interest rates of small savings schemes. The interest rates of schemes like the Senior Citizen Savings Scheme, Monthly Income Savings Scheme, National Savings Certificate, Kisan Vikas Patra, and all post office time deposits have been hiked. The Finance Ministry has announced to increase in the interest rates on these savings schemes by up to 1.1 percentage points from January 1.
However, the order added that there has been no change in the interest rates offered on PPF Sukanya Samridhi Yojana (Sukanya Samridhi Yojana).
News agency ANI has tweeted the interest rate hike chart published by the Department of Economic Affairs.
From January 1, National Savings Certificate (NSC) will provide a 7 per cent interest rate compared to the current 6.8 per cent. The senior citizen savings scheme will give 8 per cent interest against 7.6 per cent currently. Interest rates on Post Office term deposit schemes of duration 1 to 5 years will rise by up to 1.1 percentage points. The monthly income scheme too will provide 7.1 per cent interest, up from 6.7 per cent.
The hike in the interest rates is between 20 basis points and 110 basis points for the January-March 2023 quarter. The finance ministry made these changes in a circular issued on December 30, 2022.
The small savings interest rates are linked to market yields on government securities. However, interest rates on small savings have not always tracked the movement in market rates.
One percentage point is equivalent to 100 basis points. The government reviews interest rates on small savings schemes every quarter. In the previous quarter, the government had increased the interest rates of certain small savings schemes. For the October-December 2022 quarter, the interest rates of three small saving schemes have been hiked by 10 basis points to 30 basis points. It was after a pause of close to four years.