The government has left the interest rates on small savings schemes such as the Public Provident Fund (PPF) and the National Savings Certificate (NSC) unchanged for the July-September quarter.
A hike in small savings rate was expected in view of a surge in yields on government bonds, to which their returns are linked as per a formula, amid a surge in inflation and increases in key interest rates by the central bank.
“The status quo on small savings rates for the next quarter is contrary to our expectations of a hike in rates, given the sharp increases seen in the yields on government securities of various maturities,” said ICRA chief economist Aditi Nayar.
This is the ninth quarter in a row that small savings rates have been held at the same level after rates were reduced in the range of 0.5% to 1.1% on different instruments for the April to June 2020 quarter. Further cuts, ranging from 0.4% to 1.1%, were announced for the April to June 2021 quarter but revoked overnight, citing an ‘oversight’.
For July to September, the Sukanya Samriddhi scheme will continue to earn 7.6%, the Senior Citizens Saving Scheme will earn 7.4%, followed by PPF (7.1%), Kisan Vikas Patra (6.9%), NSC (6.8%) and five-year term deposits, which will be credited with 6.7% interest.