Latest Small Savings/Post Office Interest Rates October-December 2022

Updated: September 30, 2022

The government on Thursday has effected minor hikes of 0.1% to 0.3% in interest rates payable on five small savings instruments out of a bucket of 12 instruments, including Kisan Vikas Patra, Senior Citizens’ Savings scheme, and time deposits for two and three years, for the quarter beginning 1 October.

The previous change of interest took place from April 2020 to June 2020 with a huge reduction of the interest rate applicable during the quarter Jan 2020 to March 2020.

With the revision, a three-year time deposit with post offices would earn 5.8 per cent from the existing 5.5 per cent, an increase of 30 basis points for the third quarter of the current financial year. Senior Citizen Saving’s scheme will earn 20 basis points more to 7.6 per cent from the existing rate of 7.4 per cent during the October-December period, a finance ministry notification said. The rate for Kisan Vikas Patra has been hiked from 6.9% to 7% for the coming quarter.

Rates were left unchanged for seven other designated small savings schemes, including the Public Provident Fund (PPF) at 7.1%, Sukanya Samriddhi Account Scheme at 7.6%, National Savings Certificate (6.8%) as well as five-year recurring and time deposits (5.8% and 6.7%, respectively). Returns on savings deposits and one-year time deposits were also kept static at 4% and 5.5%.

The latest chart of interest for small savings instruments for the Q3 (October –December) 2023 are as under

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, 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 accounts. 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.

The PPF account rules were modified by the Government for the benefit of account holders.  As per modified PPF 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