Will Interest Rates On Small Savings Schemes Go Down After Provident Fund? Govt Expected to Review On March 31

In recent months, some of the major banks, including SBI, HDFC Bank, ICICI Bank, Bank of Baroda, Axis Bank, have raised the interest rates on term deposits.

New Delhi: Amid rising interest rates on fixed deposits (FDs), the Reserve Bank of India (RBI) has claimed that the interest rates on small savings schemes are even higher. “The Centre reviewed interest rates on small saving instruments (SSIs) on December 31, 2021, and left them unchanged for the seventh straight quarter. The current interest rates on SSIs are 42-168 bps higher than the formula-based rates for Q4:2021-22,” the RBI stated in its ‘State of the Economy’ report.

In recent months, some of the major banks, including SBI, HDFC Bank, ICICI Bank, Bank of Baroda, Axis Bank, have raised the interest rates on term deposits.

“The private banks continue to exhibit higher pass-through to term deposit rates compared to their public sector counterparts. In recent months, a few major banks have started raising interest rates on deposits, anticipating a pick-up in credit demand,” RBI said in its report.

However, the Central government is expected to review interest rates on small savings schemes for the first quarter of 2022-23 on 31 March 2022.

These small saving schemes include Public Provident Fund Account (PPF) with an interest rate of 7.1%, Sukanya Samriddhi Accounts with an interest rate of 7.6​​%, Senior Citizen Savings Scheme (SCSS) with an interest rate of 7.4 ​% per annum.

Apart from these, other small savings schemes include Post Office Savings Account(SB) with an interest rate of 4% p.a., 5-Year Post Office Recurring Deposit Account (RD) with an interest rate of 5.8​ % per annum, Post Office Time Deposit Account (TD) with an interest rate of 5.5% – 6.7%, Post Office Monthly Income Scheme Account (MIS) with an interest rate of 6​.6​ % per annum, National Savings Certificates (NSC) with an interest rate of 6.8% and Kisan Vikas Patra (KVP ) with an interest rate of 6.9 %.

Recently, the Employees’ Provident Fund Organisation (EPFO) deducted the interest rates on EPF to a four-decade low of 8.1 per cent for 2021-22 fiscal from 8.5 per cent in the previous year.