Contrary to the expectations of small investors in a rising interest environment, the government has decided to keep the small savings interest rates unchanged for the July to September quarter. This is the ninth quarter in a row that small savings interest rates have not changed. New investments made during the second quarter of FY 2022-23 into these schemes will also earn the same interest rates as in the previous quarter. The Ministry of Finance made this announcement via a circular dated June 30, 2022.
The government has decided to keep the interest rates for small savings schemes unchanged for July 2022 to September 2022 quarter, the ninth in a row. Thus, the interest in the small savings scheme for the quarter of July 2022 to September 2022, remains unchanged for the basket comprising 12 small savings instruments including the National Saving Certificate (NSC), Public Provident Fund (PPF), Kisan Vikas Patra (KVP), and Sukanya Samridihi Scheme will be the same as the previous quarter of January 2022 to March 2022.
The previous change of interest rate took place from the quarter of April 2020 to June 2020 with a huge reduction of the interest rate in subsequent quarters. (compare the rates0
| Scheme | Rate of interest from July 1st up to 30th September 2022 |
| Scheme | Rate of interest from July 2022 to September 2022 | Rate of interest from Jan2020 to March 2020 | 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 commercial banks have been complaining that high rates of small savings schemes prohibit them from cutting deposit rates, it 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 rules account holders can now make deposits in multiples of ₹50 any number of times in a financial year with a maximum of ₹1.5 lakh a year. Earlier, a maximum of 12 deposits was permitted in a period of 1 year. Read: New rules of PPF
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