Small Savings Schemes Interest Rates Revised For 3rd Quarter (October-December) Of Financial Year 2018-19
Government has revised the interest rates on popular Small Savings Schemes for the 3rd Quarter of the Financial Year 2018-19. The news is definitely going to delight the investors, as the rates have been raised across popular small savings schemes by up to 40 basis points. 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.
Speculation of the rate hike was doing rounds for a while now as the average Government Securities yield has been higher, repo rates too were hiked very recently. Thus, Investors will benefit from the hike in interest rates on some of the popular investment schemes.
The interest has been hiked by up to 0.4% for the 3rd Quarter (October- December) of the Financial Year 2018-19. The most popular tax saving scheme Public Provident Fund scheme will offer 8% return as compared to 7.6% return in the previous quarter. Thereby, scheme gains more appeal among risk adverse investors. Similarly, 5 Year National Savings Certificate (NSC) will also earn 8% return on the investment.
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 October,’18 till 31st December,’18. The rates will now be determined at par with rates of Government Securities.
Small Savings Interest Rates on various Schemes (Click on link below to read more about the Schemes)
Public Provident Fund (PPF): Rate has been revised to 8% for the period 1st October,’18 till 31st December,’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 8% from 1st October,’18 as compared 7.6% earned previously. The interest is compounded annually.
Kisan Vikas Patra (KVP): The rate have been revised to 7.7% for the Quarter ending 31st December,’18. The interest is compounded annually.
Sukanya Samriddhi Scheme (SSS): The rate has been revised to 8.5% till 31st December,’18. The scheme is aimed towards the welfare of a girl child.
Senior Citizen Savings Scheme (SCSS): The rate has been retained at 8.7% till 31st December,’18. The scheme is aimed at the welfare of the senior citizens.
Post Office Schemes: Rates have also been revised on Post Office Term Deposits of 1 year, 2 years, 3 years, 5 years to 6.9%, 7%, 7.2% and 7.8% respectively. Monthly Income Scheme (MIS) will earn an interest of 7.7%. However, the Savings deposit will continue to fetch returns at the rate of 4%.
Small Savings Interest Rates is adjusted on quarterly basis in alignment with Government Securities rates.
This article is for informational purpose only. Readers are advised to research further to have more clarity on the topic. It is very important to do your own analysis and consult your Financial Advisor before making any investment based decision.