PPF, Post Office Deposit, NSC: Small Savings Schemes Become Attractive With Up To 8% Returns

Small Savings Schemes Interest Rate For January-March 2023: Even as the interest rates have been revised upwards on all small savings schemes, except Sukanya Samridhhi Yojana and public provident fund (PPF), the interest rate offerings on such schemes have become attractive. Now, post office FDs are also offering a return of 6.5-7 per cent depending upon the tenure.

It is the second hike since September 2022, when the government raised interest rates on some small savings schemes for the October-December 2022 quarter, which was the first hike after January 2019.

Banks have also revised upwards their interest rates on fixed deposits in the past few weeks. IDBI Bank offers 7.60 per cent interest on Retail Amrit Mahotsav Deposit. IDBI Bank has enhanced rate of interest on deposits and now offers interest up to 7.60 per cent for just 700 days, as a limited period offer, effective from December 26, 2022.

State-owned PNB has also raised FD interest rates by 40 basis points each on deposit tenure of ‘above 3 years and up to 5 years’ and ‘above 5 years and up to 10 years’ to 6.50 per cent each.

Kotak Mahindra Bank is now offering an interest rate of 7 per cent per annum on recurring deposits (RD) on tenures between 15 months and 21 months. The private sector bank has increased RD interest rate up to 75 basis points on tenures of 6 months, 12 months, 15 months, 18 months, and 21 months.

Revised Interest Rates On Small Savings Schemes For January-March 2023:

1-Year Post Office Time Deposits: 6.5 per cent

2-Year Post Office Time Deposits: 6.8 per cent

3-Year Post Office Time Deposits: 6.9 per cent

5-Year Post Office Time Deposits: 7.0 per cent

National Saving Certificates (NSC): 7.0 per cent

Kisan Vikas Patra: 7.2 per cent

Public Provident Fund: 7.1 per cent

Sukanya Samriddhi Account: 7.6 per cent

Senior Citizens Savings Scheme: 8.0 per cent

Monthly Income Account: 7.1 per cent.

Small savings schemes are savings instruments managed by the government to encourage citizens to save regularly. The small savings schemes have three categories — savings deposits, social security schemes and monthly income plan.

Saving deposits include 1-3-year time deposits and 5-year recurring deposits, as well as saving certificates such as National Saving Certificates (NSC) and Kisan Vikas Patra. Social security schemes include Public Provident Fund, Sukanya Samriddhi Account and Senior Citizens Savings Scheme. The monthly income plan includes the Monthly Income Account.

Since May this year, the Reserve Bank of India (RBI) has raised the key repo rate by 225 basis points, prompting banks to raise interest rates on deposits as well. On December 7, the RBI increased the repo rate by 35 basis points to 6.25 per cent, the fifth-time increase in a row. The repo rate is the interest rate at which the RBI lends to the commercial bank.

In September 2022, the interest rates were revised upwards for Kisan Vikas Patra (KVP), senior citizens savings scheme, monthly income account scheme, and time deposits for two and three years, for the January-March 2023 quarter. The rates were increased in the range of 10-30 basis points.

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