New Delhi: The Central government has raised the interest rates on eight of the 12 small savings schemes, including NSC and KVP in January to March 2023 quarter. These saving schemes got an increment by 20 to 110 basis points (bps) while returns on Public Provident Fund (PPF) and Sukanya Samriddhi Account Scheme were unchanged at 7.1 percent and 7.6 percent respectively. This is the second successive quarter that the government has hiked the small savings rates.
The returns on Kisan Vikas Patra (KVP) and the National Savings Certificate (NSC) were raised to 7.2 percent and 7 percent, respectively, this means a 20 bps hike with one bps being equal to 0.01 percent. The raise in the interest rates on small savings schemes was done for the first time in October to December quarter since January 2019. The interest rates on the Senior Citizens’ Savings Scheme and the Monthly Income Account Scheme are raised by 40 bps each, to 8 percent and 7.1 percent, respectively.
The Reserve Bank of India since May has raised the benchmark lending rate to 6.25 percent, which led the banks to raise interest rates on deposits. Previously the benchmark lending rate was 2.25 percent.
The interest rates on the saving schemes were expected to be raised, even more than they actually did. According to the calculations by RBI, the interest rates could have been raised further and economists also expected them to hike due to inflation. Such a hike helps the economy to deal with inflation and in simpler terms, people deposit more into such schemes which reduces the aggregate demand to help with inflation.
The increase in interest is good for the beneficiaries are they can save more in these saving schemes.
