As per a notification by the finance ministry on September 29, the rate of interest on the five-year recurring deposit has been increased to 6.7 percent from 6.5 percent. All other small savings schemes will continue to offer the same rate of interest as they did in July-September.
The latest chart of interest for small savings instruments for the Q3 (October 1 to December 31) of 2023 is as under.
| Scheme | Rate of interest for October 1-December 31, 2023 | Rate of interest for July-September 2023 | Interest compounded |
| Savings account | 4.00% | 4.00% | Annual rest |
| 1-year time deposit | 6.90% | 6.90% | Quarterly rest |
| 2-years’ time deposit | 7.00% | 7.00% | Quarterly rest |
| 3-years’ time deposit | 7.00% | 7.00% | Quarterly rest |
| 5-years’ time deposit | 7.50% | 7.50% | Quarterly rest |
| 5-years’ Recurring Deposit | 6.70% | 6.50% | Quarterly rest |
| 5years’ Senior Citizen Saving Scheme(SCSS) | 8.20% | 8.20% | Interest paid quarterly, Quarterly rest |
| 5- years Monthly Income Account Scheme | 7.40% | 7.40% | Interest paid monthly, |
| 5 -years NSC | 7.70% | 7.70% | Annual rest |
| PPF (Public Provident Fund) | 7.10% | 7.10% | Annual rest |
| KVP (Kisan Vikas Patra) | 7.50 %(matures in115 months) | 7.50 %(matures in115 months) | Annual rest |
| Sukanya Samriddhi Account Scheme | 8.00% | 8.00% | 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, 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 of April -June 2018, 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 the 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
