Review every three months: The government reviews the interest rates of small savings schemes every three months. Last time on September 30, interest rates were increased only on two schemes, while there was no change in other categories of schemes. In such a situation, it is expected that this time a decision on increase in remaining schemes can be taken.

There was no change in their interest rates: At present the government is running a total of 12 types of small savings schemes including Post Office Savings, PPF, Sukanya, Senior Citizen, National Certificate. Last time, the interest rates of most of these savings schemes were kept stable. Only the interest rate for the five-year recurring deposit scheme was increased from 6.5 to 6.7 per cent.

No change in PPF since last three years

Before April 1, 2020, the interest rate on PPF in the country was 7.9%. During the Corona period, the government had revised and reduced the interest rates of many savings schemes in the April-September 2020 quarter. Since then the interest rate of PPF has remained at 7.1 percent. Meanwhile, there were many amendments in interest rates but there was no change in PPF.

It is expected that this time the government may increase the interest rate of PPF after about four years. According to officials, the main reason for not much increase in PPF interest rate is that the return after tax in this scheme is high. In the case of the highest tax bracket, it reaches approximately 10.32 per cent. In view of this, the interest rate is not changed.

Finance Ministry decides

The Finance Ministry announces rates on small post office savings every quarter. Except for small savings schemes, banks decide the rates on FD in their own way based on the repo rate of the Reserve Bank. The purpose of small savings schemes is to encourage common people to save. Also, a source of regular earning is to be provided through Monthly Income Scheme and Senior Citizen Deposit Scheme.

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Investors investing in Public Provident Fund ie PPF can get a big deal. There is a possibility that the interest rates of PPF can be increased for the second quarter of the financial year 2023-24 from July to September. The Finance Ministry is about to review the interest rates of small savings schemes. Which can be announced today.

There has been no increase in the interest rates of PPF since April 2020 till now. PPF is currently getting 7.1 percent interest annually. However, during this period, the central government has increased the interest rates of almost all small savings schemes for the last three quarters, including Sukanya Samriddhi Yojana.

For April to June, the interest rate of these savings schemes was increased by 10 to 70 basis points. In which the interest rate of NSC i.e. National Saving Certificate was increased from 7 percent to 7.70 percent. The interest rate of Sukanya Samriddhi Yojana was increased from 7.6 per cent to 8 per cent. At present, 7.5 percent interest is being received annually on Kisan Vikas Patra and its maturity period was reduced from 120 months to 115 months.

The interest rates of these savings schemes have been increased but the government has not increased the interest rates of PPF. While RBI has increased the repo rate by 2.50 in a year. After which the banks have increased the interest rates on FDs, then the government has increased its small savings schemes. In such a situation, the investors of PPF are also expecting the interest rates to be increased.

There is a formula for fixing the interest rates of PPF which was notified by the Finance Ministry in 2016. Under this, 25 basis points more interest is given on PPF than the 10-year bond yield. Currently the bond yield is 7.3 per cent. Based on this formula, the interest rates of PPF should be increased to 7.55 per cent.

Urban and rural common Indians invest in savings schemes like PPF as safe. These are the people who rely on investing in these schemes while staying away from the ups and downs of the stock market and also invest to save tax. To maintain the popularity of PPF, there is pressure on the government to increase the interest rates.

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