The Centre on Thursday raised interest rates on five small savings schemes, including Senior Citizen Saving Scheme, between 10 to 30 basis points for the three month period starting October 01. However, there is no change in the interest rate on Public Provident Fund (PPF), National Savings Certificate and Sukanya Samriddhi Scheme.
According to an office memorandum by the Finance Ministry, a three-year time deposit with post offices would earn 5.8 per cent against the existing 5.5 per cent, an increase of 30 basis points.
Senior Citizen Savings scheme will earn 20 basis points more to 7.6 per cent from the existing rate of 7.4 per cent during the October-December period, the memorandum said.
New interest rate will be applicable on incremental deposits made during three month period starting 01 October, 2022.
The small savings schemes basket comprises 12 instruments, including National Savings Certificate (NSC), Public Provident Fund (PPF), Kisan Vikas Patra (KVP) and Sukanya Samridihi Scheme. The government resets the interest rate at the beginning of every quarter.
Theoretically, since 2016, interest rate resetting has been done based on yields of government securities of the corresponding maturity with some spread on the scheme for senior citizens, as advised by the Shyamala Gopinath Committee. However, in practice, the interest rate changes are made considering several other factors, including political factors.