Government Announces Small Savings Interest Rate Hike For First Quarter Of New Fiscal
Interest rates on NSC increased by 70 bps to 7.7%, while five-year time and recurring deposits hiked to 7.5% and 6.2%.
The central government raised interest rates in several of the small savings schemes for the first quarter of the fiscal, starting April 1 till June 30.
The National Savings Certificate saw the largest increase of 70 basis points to 7.7%, followed by hikes in five-year time (7.5%) and five-year recurring deposits (6.2%) of 40 basis points and 50 basis points, respectively, according to a notification issued on Friday by the Department of Economic Affairs.
The rates on Public Provident Fund have remained constant at 7.1%. The January-March quarter of the fiscal witnessed the highest rise in two and three-year deposits, with a 110 basis points increase.
The Senior Citizen Savings Scheme's interest rate has increased by 20 basis points to 8.20%, while the Monthly Income Account Scheme's interest rate was hiked by 30 basis points to 7.4%. Both the schemes had seen a 40 basis point hike in the previous quarter as well.
The Sukanya Samriddhi Scheme's interest rate was raised 40 basis points to 8%.
The National Savings Certificate will now yield 7.7% interest, as compared with 7% earlier, with a shorter maturity period of 115 months, down from 120 months earlier.
Small savings schemes are fixed-income investments made available by the government that offer risk-free, guaranteed returns. The rates on these investments are reviewed every three months.
The current changes are expected to add to the focus on savings certificates and longer-term deposits as investment options.
The announcement comes ahead of the Monetary Policy Committee meeting in the first week of April. According to some economists, rate hikes could see a pause. However, others expect a hike of 25 basis points, as inflation remains above the central bank's tolerance band.