The Government of India on Friday announced a hike in interest rates on small deposits including post office term deposits, NSC and senior citizen savings scheme. The interest rate will increase post January 1.
The Public Provident Fund (PPF) and the Sukanya Samriddhi female child savings program’s interest rates, however, have not changed.
This has been a second increase in interest rates, Since the government increased rates on some small savings plans for the quarter of October to December 2022 in September 2022. The hike was the first since January 2019. For the Kisan Vikas Patra (KVP), senior citizens savings plan, monthly income account plan, and time deposits for two and three years, interest rates were raised. Rates were raised by between 10 and 30 basis points.
Small savings plans are financial instruments that the government manages to encourage people to save money on a regular basis. Three types of minor savings plans are available: monthly income plans, social security plans, and savings deposits.
Savings deposits include 5-year recurring deposits and time deposits with terms of one to three years, as well as saving certificates like National Savings Certificates (NSC) and Kisan Vikas Patra. Public Provident Fund, Sukanya Samriddhi Account, and Senior Citizens Savings Program are examples of social security programmes. The Monthly Income Account includes the monthly income plan.
Revised Interest Rates for January-March 2023:
Time deposits made at the Post Office for one year: 6.5%
Time Deposits at the Post Office for Two Years: 6.8%
Time Deposits at the Post Office for Three Years: 6.9%
Time deposits held for five years at the post office: 7%
NSCs (National Savings Certificates): 7%
Kisan Vikas Patra: 7.2%
Public Provident Fund: 7.1%
Sukanya Samriddhi Account: 7.6%
Senior Citizens Savings Scheme: 8.0%
Monthly Income Account: 7.1%
The Reserve Bank of India (RBI) increased the benchmark repo rate by 225 basis points since May of this year, which prompted banks to increase interest rates on deposits as well. The repo rate was raised by the RBI by 35 basis points to 6.25 percent on December 7—the sixth consecutive hike. The interest rate at which the RBI loans money to commercial banks is known as the repo rate.
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