New Delhi, Aug 18 (IANS) The government has kept interest rates on small savings schemes unchanged since the past two years after they were last revised in the first quarter of 2020-21, even as banks have drastically hiked their home loan and term deposit rates after the Reserve Bank of India (RBI) raised its repo rate by 140 basis points since May 2022.
Small savings schemes like Public Provident Fund (PPF), National Savings Certificate (NSC), Post Office Savings Scheme and Sukanya Samriddhi Yojana are vital savings instruments for the common man, as they provide long-term benefits.
However, given that both public and private sector banks have raised their term deposit as well as home loan rates drastically since May 2022, keeping the rates of small savings schemes unchanged for the past two years has come as a surprise.
Sources in the banking industry, however, pointed out that when the Coronavirus pandemic broke out in 2020, both the RBI and banks had cut their deposit rates.
In fact, RBI had brought down its benchmark repo rate by 75 basis points to 4.40 per cent on March 27, 2020 — just three days after a nationwide lockdown was announced by Prime Minister Narendra Modi — to give relief to the people.
Incidentally, during that time, the government had not reduced interest rates of small savings schemes, keeping in mind the interests of the depositors, especially the pensioners, sources said.
A senior bank official said that as deposit rates had been cut by the RBI and banks during the pandemic and interest rates of small savings schemes were not reduced, the government is now hiking repo rates while keeping the rates small savings schemes unchanged to counter the rising interest burden.
The sources also pointed out that the government will monitor inflation as well as the liquidity position before taking any decision to raise interest rates of small savings schemes.
“Depending on how much inflation rises and whether there is tightening of liquidity position in future, the government may take a call on small savings schemes rates,” said a senior banking official.
On June 30, 2022, the Finance Ministry had notified that interest rates of small savings schemes have been kept unchanged for the July-September quarter of the current fiscal, effective from July 1.
“The rates of interest on various small saving schemes for the second quarter of the financial year 2022-23, starting July 1, and ending September 30, shall remain unchanged from those notified for the first quarter (April 1 to June 30) for FY 2022-23,” the Finance Ministry notification had said.
Here are the current interest rates of some key small savings schemes:
* Public Provident Fund (PPF): 7.1 per cent
* National Savings Certificate (NSC): 6.8 per cent
* Post Office Monthly Income Scheme: 6.6 per cent
* Sukanya Samriddhi Yojana: 7.6 per cent
* Five-year Senior Citizens Saving Scheme: 7.4 per cent
* Kisan Vikas Patra: 6.9 per cent
(IANS)
