Small Savings Schemes Interest Rates for the 2nd Quarter of Financial Year 2024-25

• Posted By Amritesh
• On July 15th, 2024
• Comments: no responses

The Ministry of Finance announced recently that the small savings schemes interest rates will remain unchanged for the quarter ending September 30, 2024. Government has synchronized small savings schemes interest rates with the prevailing market rates of Government Securities. These rates are now adjusted quarterly to mirror the current market conditions. Presently, the repo rate stands at 6.50%, while the reverse repo rate remains steady at 3.35%.

Small Savings Scheme Interest Rate for FY 2023-24

Small savings schemes encompass a diverse array of financial instruments offered by Government, tailored to meet the needs of savers from all walks of life. From the humble savings account to more sophisticated options like Public Provident Fund (PPF), National Savings Certificate (NSC), and Senior Citizen Savings Scheme (SCSS), these schemes offer attractive interest rates coupled with security and convenience.

One of the most appealing aspects of small savings schemes is their accessibility. Unlike complex investment vehicles that may require a certain level of financial literacy or a substantial initial capital, these schemes are designed to be inclusive, allowing individuals with varying income levels to participate. This inclusivity is particularly significant in emerging economies where financial literacy levels may be lower, yet the need for savings and investment avenues remains high.

Moreover, small savings schemes often come with tax benefits, further enhancing their appeal. Instruments like PPF and NSC offer tax deductions under Section 80C of the Income Tax Act, making them not only a means of saving but also a tool for tax planning. This dual benefit of saving and tax efficiency makes these schemes a cornerstone of many individuals’ financial portfolios. Another compelling feature of small savings schemes is their stability. While markets may fluctuate and economic conditions may be uncertain, these schemes provide a reliable and predictable return on investment.

Small Savings Schemes Interest Rates

Small Savings schemes are aligned with Government Securities interest rates to provide level playing field to the Banks. Banks have adjusted their interest rates (lending/borrowing) on deposits and loans in alignment with the tweaks in the rates. Small Savings Schemes interest rates are comparatively higher than Bank deposit rates, in addition to the tax benefits available on selected Small Savings Schemes. The Central Bank (RBI) had clamored to bring parity in terms of the interest rate structure. However, retail inflationary pressure is a concern for the investors banking on these investment products. Savings Interest Rates FY 2024-25 is revised on quarterly basis.

According to a notification from the finance ministry, “The small savings schemes interest rates for the initial six months of FY 2024-25, starting from April 1, 2024, and ending on September 30, 2024, shall remain unchanged.

Under the Sukanya Samriddhi scheme, deposits will continue to attract an interest rate of 8.2 percent, while the rate on a three-year term deposit remains steady at 7.1 percent. Similarly, the interest rates for popular schemes such as Public Provident Fund (PPF) and post office savings deposits will remain at 7.1 percent and 4 percent, respectively. The rates for PPF have remained unchanged since the second quarter of the financial year 2020-21.

The interest rate on the Kisan Vikas Patra (KVP) will remain at 7.5 percent, with investments maturing in 115 months. Additionally, the interest rate on the National Savings Certificate (NSC) will stay at 7.7 percent for the April-September 2024 period. The Monthly Income Scheme (MIS) will continue to earn 7.4 percent for investors, mirroring the rates of the last quarter.

The government typically notifies the small savings schemes interest rates, primarily operated by post offices, every quarter. Senior Citizen Scheme (SCSS) is offering an interest of 8.2% for the quarter ending 30^th September, 2024. Considering the guaranteed return offered under the Senior Citizen Scheme, it is one of the best options for risk averse investors. Small Savings Schemes interest rates for the 03rd quarter of FY 2024-25 will be declared in the last week of September, 2024.

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