Amid rising fixed deposit (FD) interest rates, the Reserve Bank of India (RBI) claimed that interest rates on small savings schemes are higher. “The Government of India reviewed the interest rates on Small Savings Instruments (SSI) on 31st December 2021 and left them unchanged for the seventh consecutive quarter. Current SSI interest rates are 42 to 168 basis points above formula-based rates for the fourth quarter of 2021-22,” RBI said in its “State of the Economy” report.
In recent months, a few major banks, including SBI, HDFC Bank, ICICI Bank, Bank of Baroda, Axis Bank, have started raising interest rates on term deposits.
“Across all national banks, private banks continue to show higher pass-through rates on time deposits than their public sector counterparts. In recent months, a few large banks have started raising interest rates on deposits, anticipating a recovery in credit demand,” RBI said in its report.
The government is expected to review the interest rates for small savings plans for the first quarter of 2022-23 on March 31.
These schemes include the Public Provident Fund (PPF) account with an interest rate of 7.1%, Sukanya Samriddhi accounts with an interest rate of 7.6%, the Savings Scheme for the Elderly (SCSS) with an interest rate of 7.4% per annum.
Other small savings plans include the Postal Savings Account (SB) with an interest rate of 4% per annum, the Postal Recurring Deposit Account (RD) at 5 years with an interest rate of 5 .8% per annum, the Postal Term Deposit Account (TD) with an interest rate of 5.5% – 6.7%, a Postal Monthly Income (MIS) Account 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%.
The Employees Provident Fund Organization (EPFO) recently cut interest rates on EPF to a four-decade low to 8.1% for the 2021-22 financial year, from 8.5% l ‘last year. “The Central Board has recommended that an annual interest rate of 8.10% be credited on ETH accumulations in members’ accounts for the fiscal year 2021-22 (ending March 31, 2022),” it said. said the press release from the Ministry of Labor.
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