The government has announced a slight increase in interest rates for certain small savings schemes from July to September. The rate hike ranges from 10 to 30 basis points (bps) across different schemes. The revised rates indicate a 10 bps increase for the 1-year and 2-year time deposit schemes, while the 5-year recurring deposit schemes will experience a rise of 30 bps.
A Comprehensive Look at Small Savings Schemes
Specifically, the interest rate for the 1-year deposit scheme has been raised to 6.9 percent, while the 2-year deposit scheme will see an increase to 7 percent. The 5-year recurring deposit will now have an interest rate of 6.5 percent. However, popular schemes like the Public Provident Fund, National Savings Certificate, Kisan Vikas Patra, Senior Citizen Savings Scheme, and Sukanya Samridhhi Account Scheme will maintain their current interest rates of 7.1 percent, 7.7 percent, 7.5 percent, 8.2 percent, and 8 percent, respectively.
The Changing Tides: Small Savings Schemes and the Impact of New Interest Rates
The new rates will be effective from July 1. Small savings schemes offered by the government are favored by retail investors due to their secure nature and relatively higher interest rates compared to other investment options. These schemes cater to the diverse needs of various segments of society, including senior citizens, children, and low-income individuals.
It’s worth noting that the recent interest rate increases for select small savings schemes are lower compared to the previous quarter when the government announced hikes of up to 70 bps. Over the past two quarters, interest rates on popular schemes such as the Sukanya Samriddhi Account Scheme, Senior Citizen Savings Scheme, National Savings Certificate, Kisan Vikas Patra, Monthly Income Savings Scheme, and all post office time deposits have been raised.
