The interest rates of a basket of 12 Small Savings Scheme instruments remain unchanged for the sixth straight quarter.
The Finance Ministry on Thursday announced that interest rates on small saving schemes for the 3rd quarter starting from October 1, 2021, and ending on December 1, 2021, shall remain unchanged from the current rates applicable for the second quarter (Q2) of FY 2021-22.
The small savings schemes basket comprises 12 instruments including the National Saving Certificate (NSC), Public Provident Fund (PPF), Kisan Vikas Patra (KVP), Senior Citizen Savings Scheme, and Sukanya Samridihi Scheme. The government resets the interest rate at the beginning of every quarter. The latest interest rates are as under
| Scheme | The interest rate for October to December 2021 | The interest rate for Jan to March 2020(before the last change) | Interest compounded |
| Savings account | 4.00% | 4.00% | Annual rest |
| 1-year time deposit | 5.50% | 6.90% | Quarterly rest |
| 2-years time deposit | 5.50% | 6.90% | Quarterly rest |
| 3-years time deposit | 5.50% | 6.90% | Quarterly rest |
| 5-years time deposit | 6.70% | 7.70% | Quarterly rest |
| 5-years Recurring Deposit | 5.80% | 7.20% | Quarterly rest |
| 5yearsr Senior Citizen Saving Scheme | 7.40% | 8.60% | Interest paid quarterly, Quarterly rest |
| 5- years Monthly Income Account Scheme | 6.60% | 7.60% | Interest paid monthly, |
| 5 -years NSC | 6.80 % | 7.90 % | Annual rest |
| PPF (Public Provident Fund) | 7.10% | 7.90% | Annual rest |
| KVP (Kisan Vikas Patra) | 6.90 %(matures 124 months) | 7.60 %(matures 113 months) | Annual rest |
| Sukanya Samriddhi Account Scheme | 7.60% | 8.40% | Annual rest |
The government resets the interest rate at the beginning of every quarter since 2016 based on yields of government securities of the corresponding maturity with some spread on the scheme for senior citizens, as advised by the Shyamala Gopinath Committee. The Economic Survey had earlier suggested that the interest rates on the small savings schemes be reduced to bring them in consonance with the interest rates prevailing in the economy, as the Yields on dated Government Securities (G-Secs) are continuously on the decline. The commercial banks have also been complaining that high rates of small savings schemes prohibit them from cutting deposit rates, was expected a downward revision in interest rates for small savings schemes for the ensuing quarter, but the government preferred to keep them unchanged.
Other important news on Small savings instruments:
During the announcement of interest for the quarter April -Jun 18, the Ministry withdrew the earlier restrictions for credit of interest in respect of small savings to basic Savings Bank account. Now all the interest and maturity proceeds of small savings instruments operated by the Department of Posts may be paid to the depositors through the depositor’s savings account standing at a post office or any commercial bank, by cheque or in cash.
As per modified PPF account rules the holders of PPF accounts can make deposits in multiples of Rs.50 any number of times in a financial year with a maximum limit of Rs.1.5 lakh a year. Earlier to modification, a maximum of 12 deposits was permitted to deposit in a financial year.
Read: New rules of PPF
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