Small Savings Schemes Interest Rates Retained For 1st Quarter (April-June) Of Financial Year 2018-19
Government has retained the interest rates on popular Small Savings Schemes for the 1st Quarter of the Financial Year 2018-19. Previously, Government had decided to align the small savings interest rates with the relevant market rates of Government Securities. The rates are now recalibrated every quarter in order to maintain it at par with the current market rates. The interest rates on Small Savings Schemes are slightly higher as compared to rates offered by Banks.
The Central Bank (RBI) had been clamoring for revision in rates as it is leading to distortion in rate structure. Government is trying to provide a level playing field to the Banks by aligning the deposit rates to the market rates. The interest rates were speculated to be raised given the fact that Government Securities witnessed higher returns in the recent past. Thus, there may be disappointment among Individuals expecting better returns on some of the popular investment schemes.
The 0.2% rate cut had been announced in the previous Quarter of FY 2017-18. The rates have been falling rather frequently in the last few quarters. Despite the rate cuts, investment in Public Provident Fund (PPF) and other investment schemes remains attractive when compared with other fixed return instruments. In my opinion, Individuals should look at other lucrative investment options as Mutual Funds and Bonds.
The Government has revised the deposit rates across all Small Savings Scheme which is reviewed on quarterly basis. The new rates are applicable from 1st April,’18 till 30th June,’18. The rates will now be determined at par with rates of Government Securities.
Small Savings Interest Rates under various Schemes (Click on link below to read more about the Schemes)
Public Provident Fund (PPF): Rate has been revised to 7.6% for the period April,’18 till 30th June,’18. Government has also permitted premature closure of PPF account in genuine cases, such as serious ailment, higher education of children, etc applicable to accounts which have completed 5 years from the date of opening. However, a penalty of 1% reduction in interest payable on whole deposit is imposed in case of premature withdrawal.
National Savings Certificate (NSC): The 5 year NSC will earn an interest of 7.6% from 1st January,’18 as compared 7.8% earned previously. The interest is compounded annually.
Kisan Vikas Patra (KVP): The rate have been revised to 7.3% for the Quarter ending 30th June,’18. The interest is compounded annually.
Sukanya Samriddhi Scheme (SSS): The rate has been revised to 8.1% till 30th June,’18.
Senior Citizen Savings Scheme (SCSS): The rate has been retained at 8.3% till 30th June,’18.
Post Office Schemes: Rates have also been revised on Post Office Term Deposits of 1 year, 2 years, 3 years, 5 years as 6.6%, 6.7%, 6.9% and 7.4% respectively. Monthly Income Scheme (MIS) will also earn an interest of 7.4%. However, the Savings deposit will continue to fetch returns at the rate of 4%.
Small Savings Interest rates are aimed at matching the rates offered by the Banking Sectors.