Govt leaves interest rates on all small savings plans unchanged for Jan-Mar
This story was originally published at 19:41 IST on 31 December 2024
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--Govt leaves interest rates on small savings schemes unchanged for Jan-Mar
NEW DELHI – The government left the interest rates on all small savings schemes unchanged for Jan-Mar. The interest rates on small savings schemes have been the same for a year now.
The government had raised the rate of interest on small savings schemes last year by 10-20 basis points for the quarter-ended March. Between September 2022 and December 2023, the government increased interest rates on the schemes by 60-160 bps.
The interest rate on the Mahila Samman Savings Certificate, which was announced in the Budget for 2023-24 (Apr-Mar), continues to be 7.5%. In her FY24 Budget speech, Finance Minister Nirmala Sitharaman had introduced the small savings scheme for two years, till March 2025. The scheme involves deposits of up to 200,000 rupees for a period of two years with an option of partial withdrawal.
Interest rates on small savings schemes are decided by the government, although any changes to them are expected to be determined by movements in market yields on government securities of similar maturity. Therefore, when market yields on government securities decline, interest rates on small savings schemes should fall. A spread of 0-100 bps is applied to the market yields to arrive at the small savings interest rates.
However, these interest rates have been left unchanged for Jan-Mar even though government bond yields have declined. In Sept-Nov, which was the reference period for interest rates on small savings for Jan-Mar, the yield on both 10-year and five-year government bonds fell by 9 bps each. Meanwhile, the cut-off yield on the 364-day Treasury bill fell by 6 bps over Sept-Nov.
Interest rates on various small savings schemes for Jan-Mar are as follows:
| Instrument | Rate of interest |
| Savings deposit | 4.0 |
| One-year time deposit | 6.9 |
| Two-year time deposit | 7.0 |
| Three-year time deposit | 7.1 |
| Five-year time deposit | 7.5 |
| Five-year recurring deposit | 6.7 |
| Senior citizen savings scheme | 8.2 |
| Monthly income account scheme | 7.4 |
| National savings certificate | 7.7 |
| Public provident fund scheme | 7.1 |
| Kisan vikas patra | 7.5 |
| Sukanya samriddhi account scheme | 8.2 |
End
Reported by Krity Ambey
Edited by Akul Nishant Akhoury
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