Small savings rates raised by 10-30 bps; PPF, NSC excluded

New Delhi: After a gap of nine quarters, the central government on Thursday raised interest rates on a handful of small savings schemes that do not get income tax benefit.

While the interest rate on Public Provident Fund and National Savings Certificate were retained, the rates for five other schemes, where income accruing is taxable, have been hiked by up to 30 basis points.

The interest rates were last revised for the first quarter of 2020-21, by reducing the rates.

Interest rates for small savings schemes are notified on a quarterly basis.
With the revision, a three-year time deposit with post offices would earn 5.8 per cent from the existing 5.5 per cent, for the third quarter of the current financial year. Senior Citizen Savings Scheme will earn 20 basis points more at 7.6 per cent from the existing rate of 7.4 per cent during the October-December period, a finance ministry notification said.

On Kisan Vikas Patra (KVP), the government has revised both tenure and interest rates. The new rate for KVP would be 7 per cent against 6.9 per cent and the maturity period is 123 months against 124 months.

Monthly Income Scheme would earn 10 basis points more at 6.7 per cent as compared to existing 6.6 per cent.

However, Public Provident Fund and National Savings Certificate will continue to have an annual interest rate of 7.1 per cent and 6.8 per cent, respectively.

The one-year term deposit scheme of the post office will continue to earn an interest rate of 5.5 per cent in the quarter.

Term deposits of five years will fetch an interest rate of 6.7 per cent, to be paid quarterly, while the five-year recurring deposits will earn interest of 5.8 per cent, the same as in the current quarter.

The interest rate on girl child savings scheme Sukanya Samriddhi Yojana was retained at 7.6 per cent, while savings deposits will continue to earn 4 per cent per annum.