While the RBI held interest rates steady in August 2023, India grapples with persistent inflation concerns. This has left interest rates, including those for bank deposits and small savings plans like PPF, NSC, and KVP, at elevated levels. The interest rates for these small savings schemes are scheduled for revision at the end of September 2023, specifically on September 29 or 30.
Small savings scheme interest rates are typically adjusted quarterly. The last update on June 30 saw an upward revision in rates for various small savings schemes. Previously, rates were increased for the April-June 2023 period as well.
In the June 30 revision, the government raised rates by 10 basis points (bps) for 1-year and 2-year post office time deposits, setting them at 6.9% and 7.0%, respectively. Additionally, they increased rates by 30 bps for 5-year recurring deposits, establishing them at 6.5%. Rates for other schemes remained unchanged.
Notably, small savings instruments had maintained the same rates for nine consecutive quarters, spanning from the second quarter of 2020-21 to the second quarter of 2022-23.
Small Savings Schemes encompass various savings tools managed by the government to promote regular savings among citizens. These schemes fall into three categories: savings deposits (including 1-3-year time deposits and 5-year recurring deposits), social security schemes (like PPF, Sukanya Samriddhi Account, and Senior Citizens Savings Scheme), and monthly income plans (such as the Monthly Income Account).
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