Latest small saving scheme interest rate in 2020

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Latest small saving scheme interest rates

With stock markets going down and economy collapsing it’s not a good time for people who depend on regular income from small saving schemes like fixed deposits, PPF, NSC etc. With the 10 year bond yields falling the Govt of India have slashed the small saving schemes interest rates to lows that were seen long time back.

Lets have a look at Latest small saving scheme interest rate in 2020

small saving scheme interest rate
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small saving scheme interest rate

Latest small saving scheme interest rate in 2020

Savings instrumentRate of interest from 01.01.2020 to 31.03.2020Rate of interest from 01.04.2020   to 30.06.2020
Senior Citizen Savings Scheme8.67.4
Monthly Income Account 7.66.6
National savings certificate7.96.8
Public provident fund7.97.1
General Provident fund7.97.1
Employee provident fund8.658.65
Voluntary provident fund8.658.65
Kisan Vikas Patra7.66.9
Sukanya Samriddhi account scheme8.47.6
Savings deposit44
1 Year Time deposit6.95.5
2 Year Time deposit6.95.5
3 Year Time deposit6.95.5
5 Year Time deposit7.76.7
5 Year recurring deposit7.25.8
Latest small saving scheme interest rate in 2020
Date – DEA

From the above table, you can see that the interest rates of various instruments have been slashed considerably. If you are a conservative investor then you will probably not make much money by investing in these small savings schemes instruments.

Why is the small saving scheme interest rates falling?

India 10 year Yield

The small saving scheme interest rates generally are set according to the Govt 10-year yield bonds. It doesn’t have a direct correlation but it drives the decision making. When the Govt 10-year yield bonds fall, which right now is below 6, the small saving scheme interest rates fall as the govt will not be able to provide a higher interest rate for the savings made.

How does the small saving scheme interest rates fall impact your investments?

The Govt of India declares the small saving scheme interest rates for a time period. So your investments during that time period will earn lesser interest when the small saving scheme interest rates fall.

Will the reduced small saving scheme interest rates be applicable for the entire duration of investments?

NO. The lower small saving scheme interest rates are applicable only for the duration declared by the govt.

Should I stop investing in small saving schemes?

People invest in small saving scheme because of their certainty and govt backing. If you are a risk averse investor and willing to take risk for returns then you can shift from small saving scheme to higher risk instruments like stocks and mutual funds.

Is it better to invest in mutual funds than small saving schemes?

Small saving schemes are for those investors who seek regular fixed income with less risk and Mutual fund investments are for those investors who are willing to take certain risk to get higher returns than the small saving schemes.

Equity Mutual funds gives excellent returns if the investor has a long time horizon. so If you are looking for returns in long term(10+ years) then you can look to switch from small saving schemes to mutual funds.

What are small saving schemes?

Small savings schemes are types of investment instruments which are backed by Govt of India available for all Indian citizens. They are-

Senior Citizen Savings Scheme
Monthly Income Account 
National savings certificate
Public provident fund
Genral Provident fund
Employee provident fund
Volutary provident fund
Kisan Vikas Patra
Sukanya Samriddhi account scheme
Savings deposit
1 Year Time deposit
2 Year Time deposit
3 Year Time deposit
5 Year Time deposit
5 Year recurring deposit

Who should invest in small saving schemes?

People who are looking for safe, secure and consistent returns on their investments should look to invest in small saving schemes. Generally people who are retired or close to retirement should ideally look to invest in small saving schemes.

Who should not invest in small saving schemes?

If you have a long term investment view and willing to take some risk to get much higher returns than small saving schemes then you shouldn’t invest in small saving schemes. Most of the times the small saving schemes can not beat the inflation rates so in long term you don’t really make any returns if you factor in inflation.


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