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Informist, Friday, Mar. 28, 2025

--Govt leaves interest rates on small savings schemes unchanged for Apr-Jun

NEW DELHI – The government left the interest rates on all small savings schemes unchanged for Apr-Jun. The interest rates on small savings schemes have been the same for over 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 2024. 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) and is set to end on Monday, continues to be 7.5%. In her FY24 Budget speech, Finance Minister Nirmala Sitharaman had introduced the small savings scheme that involves deposits of up to INR 200,000 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 Apr-Jun, even though the Reserve Bank of India's Monetary Policy Committee cut the policy repo rate by 25 basis points in February, as well as government bond yields changed. In Dec-Feb, which was the reference period for interest rates on small savings for Apr-Jun, the yield on 10-year government bonds rose by one basis point and that on five-year bonds fell by 9 bps.

Interest rates on various small savings schemes for Apr-Jun are as follows:

End

Reported by Krity Ambey

Edited by Akul Nishant Akhoury

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