Small savings schemes interest rates raised by up to 30 bps for July-Sept 2023, PPF rates unchanged yet again

The Centre on Friday hiked the interest rates of small savings schemes by up to 30 bps for the July-September 2023 quarter. In a notification issued on Friday, the Union finance ministry said that the interest rates of most schemes were at the same level, with minor tweaks in  1-year, 2-year term deposits and recurring deposit scheme. The interest rate on small savings schemes for July-September quarter will now range from 4 per cent to 8.2 percent, the finance ministry said on June 30.

Interest rates on schemes such as Senior Citizen Savings Scheme, National Savings Certificate, Kisan Vikas Patra, and Sukanya Samriddhi Account Scheme have been kept unchanged.

The PPF rates were kept unchanged yet again, which was last tweaked in April-June 2020, when it was slashed to 7.1 per cent from 7.9 per cent. 

This is the fourth time in the last 12 months, the Centre has increased the interest rates on small savings schemes. 

Under the revised rates, the 1-year and 2-year time deposit scheme will see an increase of 10 bps, while the 5-year recurring deposit scheme will witness a rise of 30 bps.

Savings Scheme	Interest rate Oct-Dec	Interest rate Jan-March	Interest rate Apr-June	Interest rate July-September 2023
Post Office Savings Account	4.00%	4%	4%	4%
Post Office Recurring Deposit	5.80%	5.8%	6.2%	6.5%
Post Office Monthly Income Scheme	6.70%	7.1%	7.4%	7.4%
Post Office Time Deposit (1 year)	5.50%	6.6%	6.8%	6.9%
Post Office Time Deposit (2 years)	5.70%	6.8%	6.9%	7.0%
Post Office Time Deposit (3 years)	5.80%	6.9%	7.0%	7.0%
Post Office Time Deposit (5 years)	6.70%	7.0%	7.5%	7.5%
Kisan Vikas Patra (KVP)	7% (123 months)	7.2% (123 months)	7.5% (115 months)	7.5%
Public Provident Fund (PPF)	7.10%	7.1%	7.1%	7.1%
Sukanya Samriddhi Yojana	7.60%	7.6%	8.0%	8.0%
National Savings Certificate	6.80%	7.0%	7.7%	7.7%
Senior Citizens’ Saving Scheme (SCSS)	7.60%	8.00%	8.2%	8.2%

Interest rates at a glance

The interest rates offered by the Government on most of the small savings schemes, including Post Office Fixed Deposit, are already at par with term deposits offered by banks.

As per the notification issued by the Union Finance Ministry, the government has increased the interest rate for 1-year, 2-year, from 6.8 per cent, 6.9 per cent, in the last quarter to 6.9 per cent, 7.0 per cent, respectively.

The interest rates for Post Office Recurring Deposit has been hiked to 6.5 per cent in the September quarter from 6.2 per cent in the June quarter.  

The interest rates for Senior Citizens' Savings Scheme, Monthly Income Scheme, National Savings Certificate, Kisan Vikas Patra (KVP), Sukanya Samriddhi Yojana have been kept at the same level.

The government decides the interest rates on small savings schemes every quarter after using the formula given by the Shyamala Gopinath Committee. 

The committee had recommended that the interest rates of different schemes should be 25-100 bps higher than the yields of the government bonds of similar maturity.

Mahila Samman Saving Certificate (MSSC) 2023

Earlier this week, the government said that Mahila Samman Saving Certificate (MSSC) 2023 accounts, the newest small savings scheme, can now be opened in 12 public sector banks and four private sector banks. The scheme was announced in the Union Budget this year, and was only available through post offices.  

According to a recent notification by the Finance Ministry, one can apply for a Mahila Samman Savings Certificate, 2023, in all public sector banks and ICICI Bank, Axis Bank, HDFC Bank Ltd and IDBI Bank.

“The Central Government hereby specifies that all public sector banks and ICICI Bank, Axis Bank, HDFC Bank Ltd and IDBI Bank shall be authorised to operate the Scheme namely, Mahila Samman Savings Certificate, 2023 with effect from the date of publication of this notification in the Official Gazette.” 

The notification further said the authorisation to operate the scheme is subject to a few conditions, like the banks should have dedicated software for operation and accounting of National Savings Schemes with specific functionality for each scheme.