The Narendra Modi government is set to revise the interest rates on small savings schemes at the end of this month, with speculations abound on whether there will be a rate hike. The interest rates of various small savings schemes including Recurring Deposit (RD), Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), and others are up for revision on 30th December 2023. Notably, the interest rates for PPF have remained unchanged since April 2020, leading many to wonder if they will be increased this time.
In a related development, the government has already increased the interest rate on the five-year recurring deposit scheme for the December quarter, while keeping the rates constant for other small savings schemes.
Current interest rates on small savings schemes are as follows:
– PPF: 7.1%
– SCSS: 8.2%
– Sukanya Yojana: 8.0%
– NSC: 7.7%
– PO-Monthly Income Scheme: 7.4%
– Kisan Vikas Patra: 7.5%
– 1-Year Deposit: 6.9%
– 2-Year Deposit: 7.0%
– 3-Year Deposit: 7.0%
– 5-Year Deposit: 7.5%
– 5-Year RD: 6.7%
Investing in small savings schemes offers several benefits, including stable and predictable returns, government-backed security, assured returns, low investment thresholds ranging from ₹250 to ₹1,000, portfolio diversification opportunities, and tax deductions under Section 80C of the Income Tax Act.
Historically, small savings schemes have been popular among conservative investors for their reliable returns and government backing. The upcoming revision of interest rates will greatly impact the investment decisions of individuals looking to invest in these schemes.
As per a gazette notification dated November 9, the government has relaxed the norms for various small savings schemes, including PPF, Senior Citizen’s Savings Scheme, and Time Deposit Scheme.
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