New Delhi: The government on Friday hiked the interest rates on various small savings schemes including senior citizen savings scheme for the January to March quarter but kept the rate for Public Provident Fund (PPF) and Sukanya Samriddhi scheme unchanged for this period.
The rates on the various instruments have been raised between 20 and 110 basis points and now range from 4% to 7.6%, the government said.
The small savings interest rates, while set by the government, are linked to market yields on G-secs with a lag and are reviewed, fixed on a quarterly basis at a spread ranging from 0-100 basis points over and above G-Sec yields of comparable maturities, according to the Reserve Bank of India (RBI). A basis point is a hundredth of a percentage point.
However, interest rates on small savings have not always tracked the movement in market rates.
Small savings schemes, including post office 1-3-year term deposits and 5-year recurring deposits, are savings instruments managed by the government to encourage citizens to save regularly.
These also include saving certificates such as National Saving Certificates and Kisan Vikas Patra, Sukanya Samriddhi Account and Senior Citizens Savings Scheme.
The department of economic affairs under the ministry of finance notified changes in rates in view of the rising interest rate environment. The rate for national savings certificates has been hiked to 7% for Q4, up from 6.8% now.
“The rates of interest on various Small Savings Schemes for the fourth quarter of 2022-23 starting from 1 January, 2023 have been revised," the office memorandum released by the department of economic affairs said. The rates for the post office 1 year, 2 year, 3 year, and 5 year time deposits have been hiked to 6.6%, 6.8%, 6.9%, and 7%, from 5.5%, 5.7%, 5.8%, and 6.7% respectively. The rates for 5 year recurring deposits and savings deposits have remained unchanged at 5.8% and 4% respectively.
The rate for senior citizens savings scheme will earn 8% from 1 January, compared with 7.6% now.
Kisan Vikas Patrika with a 120-month maturity will earn 7.2% interest, compared to 7% with maturity in 123 months.
With no change in rates, the PPF will continue to earn 7.10%, while Sukanya Samriddhi account scheme will continue to earn 7.6% interest rate.saurav.anand@livemint.com
This article taken by livemint.com
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