Tuesday, May 21, 2024

Govt. hikes interest rates on most small saving schemes for June quarter, barring PPF

Image used for representational purpose only.

Image used for representational purpose only.
| Photo Credit: Getty Images

The government has left the rates on Public Provident Fund (PPF) unchanged at 7.1% for the April to June 2023 quarter, while raising the returns on Sukanya Samriddhi Account from 7.6% to 8%, the National Savings Certificate from 7% to 7.7% and Kisan Vikas Patra from 7.2% to 7.5%.

The rate of return on 1, 2 and 3 year time deposits has been raised by 10 basis points (0.10%) for the next quarter, yielding 6.8%, 6.9% and 7%, respectively, while 5 year time deposits will earn 7.5% instead of 7%.

Also read: PPF, Sukanya Samriddhi Account interest rate hike may remain elusive 

The rate paid on 5-year recurring deposits is being raised from 5.8% to 6.2%, the Senior Citizen Savings Scheme has been hiked to 8.2% from 8%, while the monthly income account scheme will now deliver 7.4% returns instead of 7.1%.

The PPF rate has now been unchanged since April 2020, when it was slashed.

The Finance Ministry notified the small savings rates for the coming quarter through an office memo issued on Friday.

While the government had raised some small savings schemes’ rates over the last two quarters, the range of schemes seeing rate hikes is wider this time, barring the PPF.

“As expected, small savings interest rates have been hiked by 10-70 basis points across various instruments. This should help to garner steady deposits in the coming quarter, in light of the expected rate hike from the Reserve Bank of India’s Monetary Policy Committee in April, which would subsequently get transmitted to bank deposit rates.” said Aditi Nayar, chief economist at ICRA.

Apart from record gross market borrowings of ₹15.43 lakh crore in 2023-24, the government plans to tap small savings schemes for financing its debt, Finance Minister Nirmala Sitharaman had said in the Budget.

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