Get it on Google Play

Interest Rates Unchanged On Small savings Schemes

Interest Rates Unchanged On Small savings Schemes:

The government has kept interest rates unchanged on Small savings Schemes, including NSC (National Savings Certificate) and PPF (Public Provident Fund) for the first quarter of 2022-23 (April-June) due to an elevated level of inflation.

  • Small Saving Schemes are the major source of household savings in India and comprise 12 instruments.
  • The depositors get an assured interest on their money.
  • Collections from all small savings instruments are credited to the National Small Savings Fund (NSSF).
  • Small savings have emerged as a key source of financing the government deficit, especially after the Covid-19 pandemic led to a ballooning of the government deficit, necessitating higher need for borrowings.
  • Small savings instruments can be classified under three heads:
    • Postal Deposits (comprising savings account, recurring deposits, time deposits of varying maturities and monthly income scheme).
    • Savings Certificates: National Small Savings Certificate (NSC) and Kisan Vikas Patra (KVP).
    • Social Security Schemes: Sukanya Samriddhi Scheme, Public Provident Fund (PPF) and Senior Citizens‘ Savings Scheme (SCSS).
  • Interest rates on small savings schemes are reset on a quarterly basis, in line with the movement in benchmark government bonds of similar maturity.
  • The rates are reviewed periodically by the Ministry of Finance.
  • The Shyamala Gopinath panel (2010) constituted on the Small Saving Scheme had suggested a market-linked interest rate system for small savings schemes.

Leave a Reply

Your email address will not be published. Required fields are marked *