NSC, SCSS, Monthly Income Scheme: Check revised interest rates on these small savings schemes for Jan-Mar

The Centre has hiked the interest rates on some of small savings schemes for the January-March period in 2023. The interest rates on the various investment schemes have been raised between 20 to 110 basis points (bps). After today’s revision, the current interest rates range from 4.0 per cent to 7.6 per cent.

As per a notification issued by the Union Finance Ministry, the government has increased the interest rate for 1-year, 2-year, 3-year, 5-year term deposits. Besides this, it has also increased the interest rate for Senior Citizens' Savings Scheme, Monthly Income Scheme, National Savings Certificate. 

The interest rates for government-backed small savings schemes, like Public Provident Fund (PPF), and Sukanya Samriddhi Yojana (SSY), were not revised for the January-March quarter.

The revised rates for the January-March quarter are:

Savings Scheme	Interest rate Oct-Dec	Interest rate Jan-March
Post Office Savings Account	4.00%	4%
Post Office Recurring Deposit	5.80%	5.8%
Post Office Monthly Income Scheme	6.70%	7.1%
Post Office Time Deposit (1 year)	5.50%	6.6%
Post Office Time Deposit (2 years)	5.70%	6.8%
Post Office Time Deposit (3 years)	5.80%	6.9%
Post Office Time Deposit (5 years)	6.70%	7.0%
Kisan Vikas Patra (KVP)	7% (123 months)	7.2% (123 months)
Public Provident Fund (PPF)	7.10%	7.1%
Sukanya Samriddhi Yojana	7.60%	7.6%
National Savings Certificate	6.80%	7.0%
Senior Citizens’ Saving Scheme (SCSS)	7.60%	8.00%

In September this year, the Centre increased the interest rates of these small savings schemes by 10-30 basis points for the October-December quarter after keeping it unchanged for more than two years. The government had kept the interest rates of these schemes higher despite lower yields on government securities in the reference period. The interest rates for small savings schemes are decided on market yields on government securities over the yield of these securities of comparable maturities. 

In September, the government increased the interest rates on two-year time deposits to 5.7 per cent, three-year deposits to 5.8 per cent, Senior Citizens Savings Scheme (SCSS, 7.6 per cent), monthly income account (6.7 per cent), and Kisan Vikas Patra (7 per cent).

Rates on certain schemes were kept unchanged. These were the popular ones, like the Public Provident fund (PPF, 7.1 per cent), Sukanya Samriddhi Yojana (SSY, 7.6 per cent) and National Savings Certificate (NSC, 6.8 per cent). 

Small savings schemes and interest rates

As per Reserve Bank of India guidelines, the rates on these small savings schemes are calculated on the yields on government securities (G-secs). In its Monetary Policy Report in September, the central bank said that with government bond yields are surging, and the revised small savings rates were 44-77 basis points below the formula implied rates.

The RBI, while calculating the interest rates for the January-March quarter, considered the September-November period, where the yield on 5-year government bonds rose by around 15 bps, while 10-year bond yields increased by 10 bps.

Small savings schemes vs bank FDs

The year 2022 saw the Reserve Bank of India revising its repo rate four times since May. The central bank has increased its repo rate by 225 bps from 4.40 per cent to 6.25 per cent. Most banks have revised their lending and deposit rates. A couple of small finance banks are even offering attractive interest rates of 8.25-8.5 per cent per annum. 

At present, prominent public and private sector banks are offering interest rates ranging from 3.00 per cent to 7.50 per cent for general investors for tenure ranging from 10 days to 10 years. While for senior citizen investors, the top banks are offering interest rates ranging from 3.5 per cent to 8 per cent for tenure ranging from 10 days to 10 years.