Here’s why interest rates on small savings plans haven’t changed in the past two years.

However, banking industry sources noted that banks and the RBI had both lowered deposit rates when the coronavirus epidemic struck in 2020.

Interest rate change of saving account

While banks have sharply increased the rates on home loans and term deposits following the Reserve Bank of India’s (RBI) 140 basis point increase in its repo rate since May 2022, the government has maintained interest rates on small savings schemes unaltered for the past two years, following their last revision in the first quarter of 2020–21.

For the average person, small savings programs like the Public Provident Fund (PPF), National Savings Certificate (NSC), Post Office Savings Scheme, and Sukanya Samriddhi Yojana are essential. because they have long-term advantages

It is surprising, though, that small savings plan rates have remained constant for the last two years given that both public and private sector banks have significantly increased their term deposit and home loan rates since May 2022.
However, banking industry sources noted that banks and the RBI had both lowered deposit rates when the coronavirus epidemic struck in 2020.

To help the populace, the RBI actually lowered its benchmark repo rate by 75 basis points to 4.40 percent on March 27, 2020, three days after Prime Minister Narendra Modi declared a statewide lockdown.

Interestingly, in that period of time, the government had not decreased interest rates of small savings plans, according to sources, with consideration for depositors’ interests, particularly those of seniors.

According to a senior bank official, the government is increasing repo rates while maintaining the rates for small savings plans same in order to combat the rising cost of borrowing. This is because the RBI and banks had lowered deposit rates during the pandemic, but the interest rates on small savings plans were not lowered.

The sources further stated that before to making any decisions regarding raising the interest rates on small savings plans, the government will keep an eye on both inflation and the state of liquidity.

The government may make a decision on small savings plans based on future liquidity position tightening and the rate of inflation.

rates “A senior bank executive stated.

The Finance Ministry announced on June 30, 2022, that small savings plans’ interest rates will remain unchanged for the current fiscal year’s July–September quarter, starting on July 1.

The Finance Ministry notification had stated, “The rates of interest on various small saving schemes for the second quarter of the financial year 2022–23, beginning on July 1 and ending on September 30, shall remain unchanged from those notified for the first quarter (April 1 to June 30) for FY 2022–23.”

The interest rates for a few popular small savings plans are as follows:

• 7.1% goes toward the Public Provident Fund (PPF).
• 6.8% of all National Savings Certificates (NSCs)
• Monthly Income Scheme for Post Offices: 6.6%
• Yojana Sukanya Samriddhi: 7.6 percentage
• Senior Citizens Savings Plan for five years: 7.4%
• The Kisan Vikas Patra: 6.9%

Account opning link:

1. Groww Account- https://app.groww.in/v3cO/kyrp1zph
2. Kotak neo Account https://kotaksecurities.ref-r.com/c/i/32531/109103906