 "Small savings schemes")
The finance ministry on Friday increased the small savings rates for the September quarter of FY24 for the one-year, two-year, and five-year recurring deposits, while keeping other interest rates unchanged.
Interest rates for the one-year and two-year deposits were raised by 10 basis points (bps) each to 6.9 per cent and 7 per cent, respectively, while small savings rate for the five-year recurring deposit was raised by 30 bps to 6.5 per cent.
The interest rates on key small deposit rates, such as public provident fund (PPF), Sukanya Samriddhi Yojana (SSY), and national savings certificate, were kept unchanged at 7.1 per cent, 8 per cent and 7.7 per cent, respectively.
Earlier, the interest rates on NSC and SSY were increased by 70 basis points (bps) and 40 bps respectively for the June quarter. In all, the government had raised interest rates on 10 small savings schemes for April 1 to June 30, 2023 period.
Deepesh Raghaw, a Securities and Exchange Board of India-registered investment advisor, said every investor compares the return of small savings against the fixed deposits (FDs) offered by banks.
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“The PPF has been kept unchanged likely due to the exemption from taxation. Despite unchanged rates in PPF and SSY, they still remain lucrative for investors as they enjoy tax-exemption,” he said.
The ministry also notified the Mahila Samman Savings Certificate announced in the FY24 Budget, with a deposit limit of ~2 lakh. The scheme will offer a fixed interest of 7.5 per cent for two years with a partial withdrawal option.
The Reserve Bank of India has kept the policy rates unchanged in the last two MPC meetings as the inflation has come within its comfort band of 4-6 per cent.
