PPF, Senior Citizen Scheme, Small Savings Scheme Interest Rates Announced; Know Here
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The finance ministry has kept the interest rates of small savings schemes unchanged for June quarter of financial year 2023. The small savings instruments include Public Provident Fund Account (PPF ), Sukanya Samriddhi Accounts, Senior Citizen Savings Scheme, Post Office Savings Account, 5-Year Post Office Recurring Deposit Account (RD), National Savings Certificates (NSC) among others. “The rate of interest on various small savings schemes for the first quarter of financial year 2022-23, starting from 1st April 2022 and ending on 30th June, 2022, shall remain unchanged from the current rates applicable for the fourth quarter (1st January 2022 to 31st March 2022) of FY 2021-22,” the finance ministry said in a statement.
PPF, Senior Citizens Savings Scheme, NSC Interest Rates
According to the latest notification by the finance ministry, PPF will continue to fetch 7.1 per cent interest. The Senior Citizens Savings Scheme (SCSS) will continue to earn 7.40 per cent while and post office time deposits will get 5.5-6.7 per cent. The interest for NSC or National Savings Certificate has been fixed at 6.8 per cent. Post Office Monthly Income Scheme or MIS will now earn 6.6 per cent interest. Post Office 5-year term deposit will continue to fetch 6.7 per cent interest while 5-year recurring deposit will earn 5.8 per cent interest. The interest rates will be applicable for April 1, 2022 to June 30, 2022.
Good News for Fixed Income Investors
With the falling rate of interest on traditional savings options such as fixed deposits over the past years, investors are attracted to small savings schemes as they offer higher returns. The government maintained the interest rates of small savings scheme at a time when bank fixed deposit rates are at all-time low. The Union government has also recently slashed the interest rate for Employees’ Provident Fund (EPF) for FY 2021-22 to a 40-year low to 8.1 per cent. This decision will bring much-needed relief to middle class investors who rely on fixed income instruments.
Will Government Cut Interest for Small Saving Schemes Soon?
The Reserve Bank of India (RBI), however, suggested a further reduction in interest rates on small saving instruments for the first quarter of fiscal 2022-23.“The Government of India reviewed interest rates on small saving instruments (SSIs) on December 31, 2021, and left them unchanged for the seventh straight quarter. The current interest rates on SSIs are 42-168 bps higher than the formula-based rates for Q4:2021-22,” it further mentioned.
The Union government review the interest rates on small savings schemes every quarter. These administered interest rates are linked to market yields on G-secs with a lag and are fixed on a quarterly basis at a spread ranging from 0-100 bps over and above G-sec yields of comparable maturities, the central bank said in its ‘State of the economy’ report.
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