Interest Rates on Small Saving Schemes : Will Govt Raise Interest Rates For October-December 2022?
Interest rates on small savings schemes, including PPF, Sukanya Samriddhi Yojana and Senior Citizens Savings Scheme, have remained unchanged since the first quarter of 2020-21. Now, as the interest rates are rising in the country, saving instruments like fixed deposits (FD) are offering increased rates than earlier. The interest rates on small savings schemes will be reviewed by the end of next week, for October-December 2022.
Interest rates on small saving schemes are reviewed on a quarterly basis. The revision happens in line with the movement in benchmark government bonds. The interest rates for October-December 2022 will be decided by the end of this month.
A senior banker told news18.com that the government will monitor the country’s liquidity position and inflation before deciding on the interest rates of small savings schemes. “The government is also expected to take into account the rising interest rates in the country, which is also raising the cost of borrowing, to take the decision.”
In the previous review, the government kept the interest rates unchanged for the July-September 2022 quarter. The finance ministry had said, “The rates of interest on various small savings schemes for the second quarter of the financial year 2022-23, starting from July 1, 2022, and ending on September 30, 2022, shall remain unchanged from those notified for the first quarter (April 1, 2022, to June 30, 2022) for FY 2022-23.”
Current Interest Rates On Various Small Savings Schemes
Public Provident Fund, Sukanya Samriddhi Account, and Senior Citizens Savings Scheme are currently offering interest rates of 7.1 per cent, 7.6 per cent and 7.4 per cent, respectively.
The post office savings deposits offer an interest rate of 4 per cent per annum. Time deposits of the tenure 1-3 years are currently offering 5.5 per cent per annum. Five-year time deposits are giving a return of 6.7 per cent a year. Five-year recurring deposits can earn 5.8 per cent a year interest.
National Saving Certificates and Kisan Vikas Patra are offering annual interest rates of 6.8 per cent and 6.9 per cent, respectively.
The Monthly Income Account is offering 6.6 per cent per annum interest.
In June, the government approved a four-decade-low interest rate of 8.1 per cent on employee provident fund (EPF) deposits for 2021-22. The 8.1 per cent EPF interest rate is the lowest since 1977-78, when it stood at 8 per cent.
In the past few weeks, several banks, including State Bank of India, Kotak Mahindra Bank, Axis Bank and ICICI Bank, have increased their interest rates on fixed deposits even as the RBI’s Monetary Policy Committee raised its key repo rate by 140 basis points in three consecutive hikes in the past three meetings.
The MPC is also scheduled to meet this week between September 28 and 30 to decide on the key interest rates in the country. India’s retail inflation in August soared to 7 per cent, as compared to 6.71 per cent in July. This comes after three months of India’s retail inflation easing from its peak, following the Reserve Bank’s repo rate hikes since May. The Consumer Price Index or CPI inflation has remained above the RBI’s upper tolerance limit of 6 per cent for the eighth straight month, and has risen despite the central bank’s efforts to curb it.
Food inflation, which is responsible for nearly half the CPI basket, quickened to 7.62 per cent in August this year, as against 6.69 per cent in July.