Post Office Small Saving Schemes: On September 30, 2022, RBI may announce to increase the repo rate. After which the possibility of increasing interest rates on small savings schemes has increased.
Small Saving Schemes Rate Hike: On the morning of September 30, 2022, RBI may increase the policy rates after the monetary policy meeting. It is believed that by increasing the repo rate by 0.50 percent, the RBI can increase it from 5.40 percent to 5.90 percent. And in the evening of the same day, after reviewing the interest rates of small savings schemes, the Finance Ministry can decide to increase the interest rates on savings schemes like PPF and Sukanya Samriddhi Yojna (NSC). On 30 September, the central government will review the interest rates for small savings schemes for the third quarter of the current financial year 2022-23 from October to December. After which an announcement can be made to increase the interest rates on other savings schemes of the post office including these savings schemes.
Why will interest rates increase?
RBI has already increased the repo rate in three phases. And on September 30, the repo rate is set to be increased for the fourth time in a row. After this decision of RBI, loans are getting expensive, so banks have been raising interest rates on deposits as well. But the government has not made any change in the interest rates on these government savings schemes. Considering these savings schemes as safe, urban rural common Indians invest. These are the people who rely on investing in these schemes while staying away from the volatility of the stock market. In such a situation, it is believed that the government can increase the interest rates on these small savings schemes.
Increase in yield on government bonds
Due to rising inflation, weakness in the rupee against the dollar and rising interest rates, there has been a tremendous jump in the yield on government bonds in the last one year. But the interest rates of schemes like PPF, NSC and Sukanya Samriddhi Yojana which are linked with these bonds have not been changed. In 2011, the Gopinath Committee recommended that interest rates on such small savings schemes should be 25 to 100 basis points higher than the yield of government bonds.
How much can interest rates increase?
The Finance Ministry can announce to increase the interest rates by up to 0.50 percent on all the schemes of small savings schemes. The government’s 10-year bond yield has risen from 6.04 per cent to above 7.25 per cent in 12 months. According to this formula, the interest rate on PPF, Sukanya Samriddhi Yojana, Senior Citizen Saving Scheme can be increased by 50 basis points from the current level.
How much is the interest at present
7.1 percent on Public Provident Fund (PPF), 6.8 percent on NSC ie National Saving Certificate, 7.6 percent on Sukanya Samridhi Yojna and 7.4 percent on Senior Citizen Tax Saving Scheme. Interest rate of 6.9 percent on Kisan Vikas Patra, 5.5 percent on one-year fixed deposit scheme and 5.5-6.7 percent interest rate on one- to five-year fixed deposit and 5.8 percent interest is being given on five-year deposit scheme. . Let us tell you that since the first quarter of 2020-21, there has been no change in the interest rates of small savings schemes in 10 quarters so far. But for the third quarter of the current financial year, interest rates are likely to be increased.
