There is good news for those investing in small savings schemes like Public Provident Fund (PPF) and Sukanya Samriddhi Yojana. Interest rates on small savings schemes may increase in the October quarter. Know how much interest can increase..
There is good news for small investors struggling with inflation. There is to be a review of interest on small savings schemes at the end of this month. Government bond yields are picking up and it is believed that interest rates on small savings schemes may be hiked. Small savings schemes include Public Provident Fund (PPF), Sukanya Samriddhi Yojana, Senior Citizens Savings Scheme (SCSS), National Savings Certificates (NSC). These schemes are called Post Office Schemes i.e. Post Office Schemes. The yield on bonds with 10-year maturity has remained above 7 per cent since April 2022. According to investing.com, it averaged 7.31 percent from June to August 2022.
A formula was notified by the Finance Ministry on March 18, 2016. In this, the interest rate of government bonds is fixed on the basis of the average yield of three months plus 25 basis points. According to this, the interest rate of PPF can go up to 7.56 percent in the next quarter. Currently, the interest rate on PPF is 7.1 percent. Similarly, the interest rate on Sukanya Samriddhi Yojana can reach 8.3 percent. Currently, the interest rate on it is 7.6 percent. According to the formula, the interest rate on government bonds is fixed on the basis of three-month average yield plus 75 basis points.
When was the change
However, the government does not always fix interest rates on the basis of this formula. Earlier, in the quarter of April-June, 2020, interest rates on small savings schemes were changed. Then interest rates were reduced. There has been no change in interest rates since then. However, there has been a significant increase in government yields in recent months. With this, it can be expected that interest rates on small savings schemes can be increased in the coming days.
There is to be a review of interest rates on Small Savings Scheme on 30 September. The interest on small savings schemes is reviewed by the government every three months. During this review, a decision is taken whether to increase, decrease or keep the interest rate constant. These interest rates are decided by the Finance Ministry. This review is to be held for the quarter October to December 2022. To check inflation, RBI has increased the repo rate three times in the recent past. After this many banks have increased the interest rate on FDs.
