After almost four years the Government has taken a step towards increasing the interest rates offered on these three small savings schemes for Q4 2022 (Oct-Dec). As per a circular released on September 29 by the Finance Ministry of India, a hike of 10 bps to 30 bps has been implemented for small savings schemes for October-December 2022 quarter.
Interest Rate Hike On These Three Small Savings Schemes For Q4 2022
The interest rate by 20 bps has been hiked for the Senior Citizen Savings Scheme which has resulted in the final figure of 7.6 per cent. 10 bps has been added to the interest rates of Kisan Vikas Patra to 7 per cent. And 30 bps have been added to the interest rates of the post office time deposit scheme for investors having 3 years tenure and 20 bps for the investors having 2 years deposit plan which has taken the final rates to 5.8 per cent and 5.7 per cent respectively.
Meanwhile, interest rates for the other Small Savings Scheme like PPF, and Sukanya Samridhi Yojana have remained unchanged.
“The latest interest rate hike was expected as the government bond yields have risen. Small savings rates are linked to government bond yields of the same maturity and are reset every quarter. Thanks to political compulsions, even though interest rates of fixed income instruments like the FD were cut, the government kept the rates of small savings schemes unchanged. Bond yields consistently declined during 2020-21. If you remember, a steep 60-70 basis rate cut in small saving schemes was hastily rolled back in April 2021 following a public uproar”, mentioned by economic times.
Also read:
RBI Hikes Repo Rates By 50 Bps Today, GDP Forecast Decreased
How Interest Rates Decided On Small Savings Schemes?
“The interest rates on small savings schemes are reviewed every quarter by the government. The formula to arrive at the interest rates for small savings schemes was given by the Shyamala Gopinath Committee. The committee had suggested that the interest rates of different schemes should be 25-100 bps higher than the yields of the government bonds of similar maturity.”
