With two successive pauses in policy repo rates and banks cutting interest rates on fixed deposits, the interest rates on key small savings schemes such as Public Provident Fund (PPF), National Savings Certificates (NSC) and Senior Citizens Savings schemes have been kept unchanged for the three-month period starting July 1.

However, two term deposits — one-year and two-year — along with 5-year recurring deposit will see an increase in the interest rate for the said quarter between 10 and 30 basis points. This is the fourth successive quarter of selective change in small savings schemes, which collectively has a subscriber base of more than 40 crore.

RD interest rates

The highest increase of 0.3 percentage points was for the five-year recurring deposit (RD). This would mean that RD holders would get 6.5 per cent interest for the second quarter of this fiscal as against the existing 6.2 per cent, according to the notification issued by the Finance Ministry. Additionally, a one-year term deposit with post offices will now earn 0.1 percentage point more, at 6.9 per cent, and 7 per cent for the two-year tenor (as against 6.9 per cent currently).

However, interest rates on three- and five-year term deposits have been retained at 7 per cent and 7.5 per cent. The interest rates for the popular PPF and savings deposits, too, were retained at 7.1 per cent and 4 per cent, respectively.

It may be noted that the amount deposited in a running scheme or a fresh deposit made during the first quarter will attract the revised rate. The government aims to issue securities worth more than ₹4.71-lakh crore against small savings this fiscal, as a source to bridge the fiscal deficit. For FY23, it was around ₹4.39-lakh crore.

Related Topics
comment COMMENT NOW