India hikes interest rates on one small savings scheme for Oct-Dec quarter

The Finance Ministry on Friday, September 29, kept small savings interest rates steady for the October-December quarter except for a marginal increase in five-year recurring deposit rates. The interest rates in schemes like the Senior Citizen Savings Scheme (SCSS), Public Provident Fund (PPF), Kisan Vikas Patra (KVP) and Sukanya Samriddhi Account Scheme (SCSS) have been unchanged.

The five-year recurring deposit rate has been increased by 20 bps to 6.7 percent, a statement issued by Ministry of Finance said.

Notably, the interest rates on small savings schemes are reviewed every quarter by the government.

Here are the revised rates offered by small savings schemes for October-December 2023 quarter:

Savings Scheme	Interest rate
Post Office Savings Account	4%
Post Office Recurring Deposit	6.7%
Post Office Monthly Income Scheme	7.4%
Post Office Time Deposit (1 year)	6.9%
Post Office Time Deposit (2 years)	7%
Post Office Time Deposit (3 years)	7%
Post Office Time Deposit (5 years)	7.5%
Kisan Vikas Patra (KVP)	7.5%
Public Provident Fund (PPF)	7.1%
Sukanya Samriddhi Yojana	8%
National Savings Certificate	7.7%
Senior Citizens’ Saving Scheme (SCSS)	8.2%

In the last announcement, the government hiked rates of select small savings schemes for the July-September 2023 quarter by 10-30 bps

The PPF have been unchanged from April-June 2020, when it was cut to 7.1 percent from 7.9 percent. Prior to that, it was cut in July-September 2019. It was last raised in October-December 2018 to 8 percent from 7.6 percent.

Talking about SCSS, the interest rate was kept constant at 8.2 percent for the July-September quarter, following two consecutive quarters of upward revisions. In the April-June period, the interest rate was raised from 8 percent to 8.2 percent, and in the preceding quarter of FY 2022-23, it was further increased to 8 percent.

Experts said the Reserve Bank of India's (RBI) decision to pause rate hikes has left limited room for further upward adjustments in small savings schemes. Furthermore, a global decrease in inflation has contributed to this scenario.

In August 2023, India's retail inflation eased to 6.83 percent from 7.44 percent in July. While small savings scheme rates are not solely influenced by monthly figures, experts point out that the expectation is that inflation will remain high throughout the year, based on the recent policy announcement where RBI Governor Shaktikanta Das increased the CPI inflation forecast for FY24 from 5.1 percent to 5.4 percent.

Source CNBCTV18