Small Savings Schemes Interest Rates Retained For 3rd Quarter (October-December) Of Financial Year 2017-18
Government has retained the interest rates on popular Small Savings Schemes for the 3rd Quarter of the Current Financial Year (2017-18). Last Year, 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 slashing of rates will bring disappointment among people as it will lower return on some of the popular investment schemes.
The 0.1% rate cut was announced in the last quarter. 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 retained the deposit rates across all Small Savings Scheme which is reviewed on quarterly basis. The new rates are applicable from 1st October,’17 till 31st December,’17. The rates will now be determined at par with rates of Government Securities.
Savings Interest Rates on Small Savings Scheme (Click on link below to read more about the Schemes)
Public Provident Fund (PPF): Rate retained at 7.8% for the period 1st July,’17 to 31st December,’17. 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 7.8% from 1st July,’17 as compared 7.9% earned previously. The interest will be compounded annually.
Kisan Vikas Patra (KVP): The rate have been retained at 7.5% for the Quarter ending 31st December,’17. The interest is compounded annually.
Sukanya Samriddhi Scheme (SSS): The rate has been retained at 8.3% till 31st December,’17.
Senior Citizen Savings Scheme (SCSS): The rate has been retained at 8.3% till 31st December,’17.
Post Office Schemes: Rates have also been retained on Post Office Term Deposits of 1 year, 2 years, 3 years, 5 years as 6.8%, 6.9%, 7.1% and 7.6% respectively. Monthly Income Scheme (MIS) will also earn an interest of 7.6%. However, the Savings deposit will continue to fetch returns at the rate of 4%.