On Thursday, the Central Government announced an interest rate hike on the small savings scheme for the third quarter (October-December). The new interest rate hikes will be applicable for Q3 of FY 2022-23 starting 1 October 2022 and ending on 31 December 2022.
It is the first time the government has raised interest rates on the small savings schemes since the January- March 2019 quarter. It had kept the rates unchanged since the April-June quarter of 2020 when they were slashed across schemes.
Senior Citizen Saving Scheme
The government has hiked the interest rate of the Senior Citizen Savings (CSS) scheme to 7.6% for the October-December period from 7.4%, earning 20 basis points more.
Kisan Vikas Patra Scheme
The government has hiked the interest rate of the Kisan Vikas Patra (KVP) scheme to 7% from 6.9%. Thus, the KVP deposits will mature in 123 months. There is a hike of ten basis points on the interest payouts of KVP.
Post Office Time Deposit
The interest rate of the Post Office Three-Year Time Deposit is increased to 5.8% from 5.5%, a rise of 30 basis points for the third quarter of the financial year. There is a hike in the interest rate of the Post Office Two-Year Time Deposit to 5.7% from 5.5%. The Post Office Monthly Income Account Scheme interest rate is increased to 6.7% from 6.6%.
Schemes Where Interest Rates Are Not Changed
There is no change in the interest rates of the following scheme:
- The Public Provident Fund (PPF) will continue to pay 7.1%.
- The National Savings Certificate (NSC) interest rate will remain at 6.8%.
- The Sukanya Samriddhi Scheme will pay an interest rate of 7.6%.
- The interest rate on Post Office Savings Deposit, 1-Year Time Deposit, 5-Year Time Deposit and Post Office Recurring Deposit have not changed.
These small savings schemes are popular with the salaried class for tax savings. The returns of these schemes are also higher than bank fixed deposits.
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