Central Government Raises Small Savings Interest Rates for January-March 2024 Quarter

New Delhi, December 29, 2023: The inside government has spoken a remoter increase in the interest rates on two small savings schemes for the January-March 2024 quarter, marking the sixth subsequent quarter of rate adjustments. This initiative, set in motion by the finance ministry, follows a pattern that commenced in October-December 2022 without nine subsequent quarters of unchanged rates.

In a notification released on December 29, the finance ministry disclosed the revised rates for the three-year time deposit, witnessing a 10 understructure points increase from 7.0 percent to 7.1 percent. Additionally, the interest rate on the Sukanya Samriddhi Account Scheme has been hiked by 20 understructure points, now standing at 8.2 percent for the upcoming quarter. Importantly, all other small savings schemes will maintain their existing interest rates from October-December 2023.

Moneycontrol’s report on December 28 hinted at the likelihood of a minor increase in interest rates for small savings schemes during January-March 2024.

Small savings interest rates, governed by the government, are linked to market yields on government securities with a spread of 0-100 understructure points over comparable maturities. Therefore, the recent increase is a response to the rise in market yields on government securities during the reference period of September-November 2023.

The revised list highlights the interest rate for the Sukanya Samriddhi Scheme at 8.2%, and for the 3-year Time Deposit, it stands at 7.1% for the last quarter of the current fiscal. Previously, these rates were 8.0% and 7.1%, respectively. Notably, the Public Provident Fund (PPF) rates have remained unchanged for over three years, with the last welding in April-June 2020, reducing it to 7.1% from 7.9%.

Before today’s revision, the interest rates for small savings schemes ranged between 4% (post office savings deposits) and 8.2% (Senior Citizens Savings Scheme). The current welding aims to alimony the rates aligned with market trends and maintain competitiveness with stock-still petrifaction schemes offered by banks.

Here’s a detailed squint at the interest rates for various small savings schemes for the fourth quarter of FY 2023-24:

Interest Rates for January-March 2024:

Savings Deposit: 4.0%
1-Year Post Office Time Deposits: 6.9%
2-Year Post Office Time Deposits: 7.0%
3-Year Post Office Time Deposits: 7.1%
5-Year Post Office Time Deposits: 7.5%
5-Year Recurring Deposits: 6.7% (previously 6.5%)
National Saving Certificates (NSC): 7.7%
Kisan Vikas Patra: 7.5% (mature in 115 months)
Public Provident Fund: 7.1%
Sukanya Samriddhi Account: 8.2%
Senior Citizens Savings Scheme: 8.2%
Monthly Income Account: 7.4%

Interest Rates in October-December 2023:

Savings Deposit: 4.0%
1-Year Post Office Time Deposits: 6.9%
2-Year Post Office Time Deposits: 7.0%
3-Year Post Office Time Deposits: 7.0%
5-Year Post Office Time Deposits: 7.5%
5-Year Recurring Deposits: 6.7% (previously 6.5%)
National Saving Certificates (NSC): 7.7%
Kisan Vikas Patra: 7.5% (mature in 115 months)
Public Provident Fund: 7.1%
Sukanya Samriddhi Account: 8.0%
Senior Citizens Savings Scheme: 8.2%
Monthly Income Account: 7.4%

Small savings schemes, categorized as savings deposits, social security schemes, and monthly income plans, offer interest rates on par with term deposits offered by banks. These schemes serve as constructive instruments for individual income tax savings, permitting deductions of up to Rs 1.5 lakh per year under Section 80C of the Income Tax Act. The interest rates are periodically revised every quarter in line with market rates for the 10-year government security, pursuit a formula established by a committee led by former Reserve Bank of India Governor Shyamala Gopinath.

Despite the adjustments in various schemes, the interest rate for the Public Provident Fund (PPF) remains unvarying at 7.1%. The inside government reviews the interest rates of small savings schemes regularly, ensuring they remain competitive and lulu for investors.

In conclusion, the interest rate adjustments, expressly the increases in the Sukanya Samriddhi Scheme and 3-year Time Deposit, reflect the government’s efforts to maintain a wastefulness between market dynamics and the benefits offered by small savings schemes. Investors, particularly those availing tax benefits, are well-considered to consider these revised rates for their investment decisions in the coming quarter.