This post was most recently updated on January 1st, 2023
In this article let’s look at the latest small saving scheme interest rate. Small saving schemes are investment options offered by the Government of India that allow individuals to save money and earn a moderate rate of return on their investments.
These schemes are designed to encourage people to save and invest their money in a disciplined manner, and they are suitable for people who are looking to save money for the long term.
There are several small saving schemes available in India, including the popular ones below:
- Public Provident Fund (PPF): The PPF is a long-term investment option that offers tax benefits and a fixed rate of return. It has a lock-in period of 15 years, and contributions can be made on a yearly or monthly basis.
- National Savings Certificate (NSC): The NSC is a long-term investment option that offers a fixed rate of return and tax benefits. It has a lock-in period of 5 years, and contributions can be made in the form of a single lump sum or in installments.
- Sukanya Samriddhi Yojana (SSY): The SSY is a small saving scheme specifically designed for the benefit of girls. It offers a fixed rate of return and tax benefits, and it has a lock-in period of 21 years. Contributions can be made in the form of a single lump sum or in installments.
- Senior Citizen Savings Scheme (SCSS): The SCSS is a small saving scheme specifically designed for senior citizens. It offers a fixed rate of return and tax benefits, and it has a lock-in period of 5 years. Contributions can be made in the form of a single lump sum or in installments.
- Kisan Vikas Patra (KVP): The KVP is a small saving scheme that offers a fixed rate of return and tax benefits. It has a lock-in period of 2.5 years, and contributions can be made in the form of a single lump sum or in installments.
Latest small saving scheme interest rate in 2023
The latest small saving scheme interest rate in 2023 is as below:
| Savings instrument | Rate of interest from 01.10.2022 to 31.12.2022 | Rate of interest from 01.01.2023 to 31.03.2023 |
| Senior Citizen Savings Scheme | 7.6 | 8.0 |
| Monthly Income Account | 6.7 | 7.1 |
| National savings certificate | 6.8 | 7.0 |
| Public provident fund | 7.1 | 7.1 |
| General Provident fund | 7.1 | 7.1 |
| Employee provident fund | 8.1 | 8.1 |
| Voluntary provident fund | 8.1 | 8.1 |
| Kisan Vikas Patra | 7.0 | 7.2 |
| Sukanya Samriddhi Yojna | 7.6 | 7.6 |
| Savings deposit | 4 | 4.0 |
| 1 Year Time deposit | 5.5 | 6.6 |
| 2 Year Time deposit | 5.7 | 6.8 |
| 3 Year Time deposit | 5.8 | 6.9 |
| 5 Year Time deposit | 6.7 | 7.0 |
| 5 Year recurring deposit | 5.8 | 5.8 |
Data source – Govt of India 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 scheme instruments.
In the recent review of the small saving scheme interest rate by govt. of India, surprisingly the PPF interest was untouched and kept at 7.1% but the Senior citizen’s savings scheme interest rate was reviewed upwards from 7.6% to 8%.
All other time deposit scheme interest rates were reviewed upwards signaling an upwards bias on the interest rate regime.
Why are the small saving scheme interest rates falling?
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.
Is it better to invest in mutual funds than in small savings 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 risks to get higher returns than the small saving schemes.
Equity Mutual funds give 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.
FAQs on small saving scheme interest rate
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 schemes because of their certainty and govt backing. If you are a risk-averse investor and willing to take risks for returns then you can shift from small saving schemes to higher-risk instruments like stocks and mutual funds.
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 are 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 time 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.
