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The Modi government may soon decide on the increase in the interest rate of small savings schemes. In this regard, the Finance Ministry will review the interest rates for the fourth quarter (January to March) of the financial year 2023-24. The increased rates will be applicable from January 1, 2024.
Review every three months: The government reviews the interest rates of small savings schemes every three months. Last time on September 30, interest rates were hiked on only two schemes, while other categories of schemes remained unchanged. In such a situation, it is hoped that this time a decision can be taken regarding the increase in the remaining schemes.
There is no change in their interest rates: Currently, the government is running a total of 12 types of small savings schemes including Post Office Savings, PPF, Sukanya, Senior Citizen, National Certificate. Last time, the interest rates of most of these savings schemes were kept fixed. The interest rate on the five-year recurring deposit scheme was increased from 6.5 to 6.7 per cent.
There has been no change in PPF for the last three years
Before April 1, 2020, the interest rate on PPF in the country was 7.9%. During the Corona period, the government revised and reduced the interest rates of many savings schemes in the April-September 2020 quarter. Since then the interest rate of PPF has remained unchanged at 7.1 percent. Meanwhile, several revisions were made in interest rates but no change in PPF.
It is believed that this time the government may increase the interest rate of PPF after about four years. According to officials, the main reason why the PPF interest rate has not increased further is that the scheme has a higher after-tax return. In the case of the highest tax bracket, it reaches around 10.32 percent. Keeping this in view, no change in interest rate has been made.
The Ministry of Finance decides
The Ministry of Finance announces the rates on small post office savings every quarter. Except for small savings schemes, banks set their own rates on FDs based on the Reserve Bank’s repo rate. Small Savings Schemes are aimed at encouraging common people to save. Also, to provide regular source of income through Monthly Income Scheme and Senior Citizen Deposit Scheme.
Increases in these schemes are possible
Current interest rate of the scheme
Savings Deposit Scheme: 4.0 percent
1-year fixed deposit: 6.9 percent
5-year fixed deposit: 7.5 percent
5-Year Recurring Deposit Scheme: 6.7 percent
National Savings Certificate Scheme: 7.7 percent
Public Provident Fund Scheme: 7.1 percent
Kisan Vikas Patra: 7.5 percent
Sukanya Samriddhi Account Scheme: 8.0 percent