Though the RBI kept the key interest rates unchanged in the last monetary policy in August 2023, the inflation rate in the country is still above the targetted levels. As a result, interest rates in the country are at elevated levels, including bank deposits and small savings schemes like PPF, NSC, and KVP. The interest rates on the small savings schemes are going to be revised at the end of September 2023 -on September 29 or 30.
Interest rates for small savings schemes are notified on a quarterly basis. In the previous revision on June 30, interest rates on several small savings schemes were revised upwards. Earlier, the rates were increased for the April-June 2023 as well.
In the last revision on June 30, the government increased 10 basis points (bps) on 1-year and 2-year post office time deposits to 6.9 per cent and 7.0 per cent, respectively, and raised 30 bps on 5-year recurring deposits to 6.5 per cent. The rates on other schemes remain unchanged.
A basis point is equal to a 100th of a percentage point.
Interest rates on small savings instruments had remained unchanged for nine consecutive quarters — from the second quarter of 2020-21 to the second quarter of 2022-23.
What Are Small Savings Schemes?
Small Savings Schemes are savings instruments managed by the government to encourage citizens to save regularly. The small savings schemes have three categories — savings deposits, social security schemes and monthly income plan.
Saving deposits include 1-3-year time deposits and 5-year recurring deposits. These also include saving certificates such as National Saving Certificates (NSC) and Kisan Vikas Patra (KVP). Social security schemes include Public Provident Fund (PPF), Sukanya Samriddhi Account and Senior Citizens Savings Scheme. The monthly income plan includes the Monthly Income Account.