Government to Revise Interest Rates on Small Savings Schemes: Currently, PPF Offers 7.1% and Sukanya Samriddhi Offers 8.2% Interest
The Ministry of Finance has announced the interest rates for all small savings schemes, including the Public Provident Fund (PPF), National Savings Certificate (NSC), and Kisan Vikas Patra (KVP), for the third quarter (October-December) today (Monday, September 30). The rates for the current financial year will see improvements. Many experts believe that the interest rates will remain unchanged, similar to the first two quarters (April-June and July-September).
Current Interest Rates on Small Savings Schemes
The interest rate on the Public Provident Fund (PPF) is currently set at 7.1%, while the Sukanya Samriddhi Yojana offers an interest rate of 8.2%. Before deciding on the interest rates for small savings schemes, the government monitors the country’s liquidity situation and inflation.
However, the PPF interest rate is reviewed every three months, along with the rates for other small savings schemes such as the NSC and KVP. The interest rates for small savings schemes range from 4% to 8.2%. The government had previously increased the interest rates in December 2023.
Quarterly Review of Interest Rates
The interest rates for small savings schemes are reviewed on a quarterly basis. The formula for determining these rates was provided by the Shyamala Gopinath Committee. The committee recommended that the interest rates for these schemes should be 0.25% to 1.00% higher than the yield on government bonds of comparable maturity.
Small Savings Schemes as a Primary Source of Household Savings
Small savings schemes are a major source of household savings in India and include 12 different instruments. In these schemes, depositors earn a fixed interest on their funds. The collections from all small savings schemes are deposited into the National Small Savings Fund (NSSF). These schemes have emerged as a source of financing for the government’s expenditure.
Classification of Small Savings Instruments
Small savings instruments can be classified into three categories:
- Postal Deposits: This includes savings accounts, recurring deposits, time deposits, and monthly income schemes.
- Savings Certificates: This category comprises the National Small Savings Certificate (NSC) and Kisan Vikas Patra (KVP).
- Social Security Schemes: This includes the Sukanya Samriddhi Yojana, Public Provident Fund (PPF), and Senior Citizens Savings Scheme (SCSS).
