MUMBAI: In a move that could bring cheer to individual investors reeling under the high inflation, the Centre on Friday raised the interest rates on most small savings schemes by 10-70 bps for the April-June quarter. After the revision, the rates on these savings schemes now range from 4 per cent to 8.2 per cent.
The government’s decision to hike rates reflects the hardening of interest rates in the economy.
The highest hike is seen in the National Savings Certificate, which will now attract a decent 7.7 per cent, up from 7 per cent earlier, for the April 1-June 30, 2023 period. The rate for the popular girl child savings scheme, Sukanya Samriddhi, has been increased to 8 per cent from 7.6 per cent.
The new rate for Senior Citizen Savings Scheme — its maximum investment limit has been raised to Rs 30 lakh from Rs 15 lakh — and Kisan Vikas Patra (KVP) is 8.2 per cent (8 per cent before) and 7.6 per cent (7.2 per cent), respectively. KVP will now mature in 115 months against 120 months earlier.
After the revision, the one-year term deposit with post offices would earn 6.8 per cent, up from 6.6 per cent before, the two-year deposit will offer 6.9 per cent (6.8 per cent), the three-year deposit will give 7 per cent (6.9 per cent) and five-year deposit will offer 7.5 per cent interest compared to 7 per cent earlier. The rate for Public Provident Fund has been retained at 7.1 per cent and that of the savings deposit at 4 per cent, while the rates of the Post Office Monthly Income Scheme have been raised by 30 bps to 7.4 per cent. The monthly scheme’s maximum deposit limit has been enhanced to Rs 9 lakh from Rs 4 lakh for single account holders.
The finance ministry also notified Mahila Samman Savings Certificate — a new savings scheme for women which will offer 7.5 per cent interest rate. The government reviews the interest rates on small savings schemes every quarter and this is the third time in the past nine months that the ministry has hiked the rates for these instruments.
The latest hike was on expected lines as interest rates have moved up in the broader economy over the past few months. The Reserve Bank of India has raised its repo rate by 250 bps since May 2022 in a bid to tame inflation, which remains about its comfort zone of 6 per cent.