The central government raised interest rates in several of the small savings schemes for the first quarter of the fiscal, starting April 1 till June 30.
The National Savings Certificate saw the largest increase of 70 basis points to 7.7%, followed by hikes in five-year time (7.5%) and five-year recurring deposits (6.2%) of 40 basis points and 50 basis points, respectively, according to a notification issued on Friday by the Department of Economic Affairs.
The rates on Public Provident Fund have remained constant at 7.1%. The January-March quarter of the fiscal witnessed the highest rise in two and three-year deposits, with a 110 basis points increase.
The Senior Citizen Savings Scheme's interest rate has increased by 20 basis points to 8.20%, while the Monthly Income Account Scheme's interest rate was hiked by 30 basis points to 7.4%. Both the schemes had seen a 40 basis point hike in the previous quarter as well.
The Sukanya Samriddhi Scheme's interest rate was raised 40 basis points to 8%.
The National Savings Certificate will now yield 7.7% interest, as compared with 7% earlier, with a shorter maturity period of 115 months, down from 120 months earlier.
Small savings schemes are fixed-income investments made available by the government that offer risk-free, guaranteed returns. The rates on these investments are reviewed every three months.
Government revises rate of interest on small savings schemes for first quarter of FY24.
For the latest news and updates, visit: https://t.co/gXeGqKQ77P pic.twitter.com/z2K2r4yZiIThe current changes are expected to add to the focus on savings certificates and longer-term deposits as investment options.
The announcement comes ahead of the Monetary Policy Committee meeting in the first week of April. According to some economists, rate hikes could see a pause. However, others expect a hike of 25 basis points, as inflation remains above the central bank's tolerance band.
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