Government hikes interest rates.
The government on Friday hiked the interest rates on various small savings schemes including senior citizen savings scheme for the January to March quarter, effective from 1 January 2023.
The changes are in tune with rising interest rates in the markets with the RBI increasing the policy rate to check inflation.
This is the second quarter of an increase in a row in interest rates for some schemes. This follows a status quo or unchanged rates for nine straight quarters.
Interest rates for small savings schemes are notified on a quarterly basis.
According to finance minister notification, the government today raised interest rates on most post-office savings schemes that do not get income tax benefits, in line with the firming of interest rates in the economy. While the interest rate for popular PPF (Public Provident Fund) and girl child savings scheme Sukanya Samriddhi were retained, rates for deposits up to 5 percent as well as NSC (National Savings Interest Rate), senior citizen savings scheme and Kisan Vikas Patra (KVP) where income accruing is taxable have been hiked by up to 1.1 percentage points.
Rates Are Given As Follow
Term deposits with tenure of one year will increase to 6.6 percent from 5.5 percent; of two-years to 6.8 percent from 5.7 percent; three years to 6.9 per cent from 5.8 percent; and five years to 7 percent from 6.7 percent.
The interest rate on the Senior Citizens Savings Scheme will increase to 8 percent from 7.6 percent.
The monthly income scheme interest rate will go up to 7.1 percent from 6.7 percent.
National Savings Certificate will fetch an interest rate of 7 percent, up from 6.8 percent earlier.
Kisan Vikas Patra (KVP) with a maturity of 120 months will have a higher interest rate of 7.2 percent against 7 percent with a maturity of 123 months earlier.
SSY And PPF Scheme Unchanged
The interest rate on girl child savings scheme Sukanya Samriddhi Yojana has retained at 7.6 percent and that for Public Provident Fund (PPF) has been kept unchanged at 7.1 percent. Savings deposits will continue to earn 4 percent per annum.
The Reserve Bank since May has raised the benchmark lending rate by 2.25 percent to 6.25 percent, prompting banks to raise interest rates on deposits as well.
However, in the case of certain schemes such as five-year recurring deposit, PPF and Sukanya Samridhhi Account and savings accounts, the existing interest rates have not been changed.
Interest rates have been increased by banks and nonbank finance companies after the Reserve Bank of India increased its key policy rate by 225 basis points since April in a bid to contain inflation.
RBI raised repo rate or short-term lending rate by 35 basis points earlier this month. This was the fifth consecutive rate hike after a 40 basis points increase in May and 50 basis points hike each in June, August and September. In all, the RBI has raised the benchmark rate by 2.25 percent since May this year.
Market analysts anticipate the interest rate to continue to rise with a possibility of a further 25 basis point rise in the rates.
Also read: Crude Oil: Prices Likely To Rise In Global Market: Check Prices
