The government made no changes to the interest rates of small savings schemes for the January-March quarter, for the fourth consecutive quarter. On Tuesday, December 31, the Ministry of Finance issued a notification giving this information.
Previously, there was no change in interest rates in the April-June (Q1FY25), July-September (Q2FY25) and October-December (July-September) quarters. That is, interest rates on all small savings schemes, including Public Provident Fund (PPF), National Savings Certificate (NSC) and Kisan Vikas Patra (KVP), will remain unchanged for the fourth quarter of FY25.
An interest rate of 7.1% is available on the Public Provident Fund
Currently, the interest rate of Public Provident Fund (PPF) is 7.1% and that of Sukanya Samriddhi Yojana is 8.2%. The government also monitors the country’s liquidity situation and inflation before deciding on interest rates for small savings schemes.
However, the PPF revises the interest rates of small savings schemes, including NSC and KVP, every three months. Interest rates on small savings plans range between 4% and 8.2%. The government had increased interest rates in December 2023.
Interest rates are revised every quarter
The interest rates for the Small Savings Plan are revised every quarter. The formula for determining their interest rates was given by the Shyamala Gopinath Committee. The committee had suggested that the interest rates of these schemes should be 0.25-1.00 per cent higher than the yield on government bonds of similar maturity.
These devices constitute the main source of household savings
The Small Savings Scheme is the main source of household savings in India and comprises 12 instruments. In these systems, depositors receive fixed interest on their money. Collections from all small savings schemes are deposited into the National Small Savings Fund (NSSF). Small savings plans have become a source of financing the public deficit.
Classification
Small savings instruments can be divided into three parts:
Postal Deposit: Savings Account, Recurring Deposit, Term Deposit and Monthly Income Plans. Savings certificates: National Small Savings Certificate (NSC) and Kisan Vikas Patra (KVP). (SCSS)