Still why did the government not increase the rates?

The reason for this is related to the decision taken at the beginning of the Corona period. When the lockdown was imposed in March 2020, the Reserve Bank of India (RBI) had cut the repo rate by 75 basis points to reduce the financial burden on the people. That is, the repo rate was reduced to 4.40%. After this, banks also reduced interest rates on FD and savings.

But at that time the government did not reduce the interest rate of small savings schemes. Especially to ensure that the elderly get regular income, returns were maintained in these schemes. Now when RBI has again increased the repo rate and banks are also paying more interest, even then the government has kept the rates of small savings schemes unchanged.

Experts believe that the government is keeping its interest expenditure under control. Because if the government also increases the interest rates of small savings schemes, then it will have to pay more interest on them. This will increase the burden on the government treasury. Therefore, at present, the government is trying to maintain balance by not increasing the rates. When banks were paying less interest on FDs, then more was being given on small savings schemes. Now that the bank rates have increased, these schemes have been kept stable.

Finance Ministry officials say that further changes will depend on the inflation and liquidity in the market. If inflation increases rapidly or there is less money in the system, then the government may consider increasing interest rates.

At present, this much interest is being received on these schemes

The government had kept the interest rates stable for the quarter of July-September 2022. Currently the interest rates on some major schemes are as follows.

1. Public Provident Fund (PPF) – 7.1%
2. National Savings Certificate (NSC) – 6.8%
3. Sukanya Samriddhi Yojana – 7.6%
4. Senior Citizen Savings Scheme (5 years) – 7.4%
5. Post Office Monthly Income Scheme – 6.6%
6. Kisan Vikas Patra – 6.9%

Even though the interest rates are somewhat low, these schemes are still considered the first choice of the middle class and pensioners due to government guarantee and stable returns.

The post PPF, Sukanya, NSC: Government Issues Fresh Interest Rate Update first appeared on Rightsofemployees.com.

Before the new year, the government has taken a big decision for those investing in small savings schemes. The Department of Economic Affairs, Ministry of Finance has announced that there has been no change in the interest rates of these schemes for the January-March 2025 quarter. This means that the same interest rates which are already fixed will remain applicable on these schemes even in the last quarter of the current financial year 2024-25.

On which schemes will this decision be applicable?

This decision will be applicable on small savings schemes like Public Provident Fund (PPF), Senior Citizen Saving Scheme (SCSS), Sukanya Samriddhi Yojana (SSY), National Saving Certificate (NSC), Post Office Time Deposit (POTD), Mahila Samman Saving Certificate and Post Office Monthly Income Scheme (POMIS). Investors on all these schemes will currently get interest based on the previous rates. That is, those who thought that they could get more interest on these schemes in the new year, this will not happen now.

How does the government decide interest rates?

Such small savings schemes are backed by the central government and have a sovereign guarantee. The government reviews the interest rates of these schemes every quarter. The recommendations of the Shyamala Gopinath Committee are followed to fix the interest rates. According to the committee, the interest rates of these schemes are fixed based on the yield of government bonds. The interest rates are generally kept 0.25% to 1% higher than the yield of government bonds, so that these remain attractive for investors.

When was the last time interest rates were increased?

The interest rates of small savings schemes were last changed in the January-March 2024 quarter. At that time, the interest rates of three-year post office time deposits and Sukanya Samriddhi Yojana were revised. There has been no change in the rates of these schemes since April 2024.

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The post Small Saving Scheme Interest Rate: Central govt has fixed the interest on small savings schemes for the January-March 2025 quarter first appeared on Rightsofemployees.com.

Small Saving Scheme is the best option for people looking for a fixed income investment option. These schemes include Public Provident Fund (PPF), National Savings Certificate and Post Office Saving Scheme. All these saving schemes are being run by the government. The returns received on this are guaranteed. These are the interest rates on small savings schemes.

What are Small Saving Schemes?

Small Savings Scheme motivates citizens to save regularly. These schemes are of three types. Saving Schemes, Social Security Schemes and Monthly Income Schemes. Saving schemes include 1 to 3 year deposit scheme, 5 year RD. Savings certificates like National Savings Certificate (NSC) and Kisan Vikas Patra (KVP) are also included. Social security schemes include Public Provident Fund (PPF), Sukanya Samriddhi Yojana and Senior Citizen Saving Scheme.

Interest on small savings scheme

Saving Account – 4 percent

1 year post office FD – 6.9 percent

2 year post office FD – 7.0 percent

3 year post office FD – 7 percent

5 year post office FD: 7.5 percent

5 year RD: 6.70 percent

National Savings Certificate (NSC): 7.7 percent

Kisan Vikas Patra: 7.5 percent (mature in 115 months)

Public Provident Fund: 7.1 percent

Sukanya Samridhi Account (Sukanya Samridhi Yojana): 8.0 percent

Senior Citizen Saving Scheme: 8.2 percent

Monthly Income Scheme: 7.4 percent

Among big banks, HDFC Bank is offering maximum interest of up to 7.75 percent on FD. SBI is giving interest up to 7.50 percent annually on FD. The government is offering interest ranging from 4 percent to 8.2 percent on small savings schemes. The government will revise the interest rates on such schemes for October-December 2023 later this month. It is believed that there is little scope for change in these.

The post How much interest is being received on PPF, Post Office FD and RD, check interest rate first appeared on Rightsofemployees.com.