RBI rate hikes likely to cause bump in small savings interest rates

Interest rates for small savings schemes are set to rise when they come up for review during the October-December period. Government officials and analysts say this will be due to consecutive policy rate hikes by the Reserve Bank of India and the rise in ten-year benchmark government bond yields resulting from that.

Since 2016, the interest rates of the 12 small savings schemes have been reviewed quarterly. They were unchanged for the April-June and the ongoing July-September quarter, after being tweaked for the January-March 2018 quarter.

“When the rates come up for review during the October-December quarter, the repo rate increases by