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The Centre on December 29 decided to raise the returns on the Sukanya Samriddhi Account Scheme (SSAS) from 8% to 8.2%, and 3-year time deposit from 7% to 7.1%, for the first quarter of 2024, while retaining the status quo on interest rates for all other small savings schemes.
This small savings rate reset was keenly awaited as returns on these schemes had been hiked significantly ahead of the last Lok Sabha polls in January 2019. However, there was no major rejig this time around and returns on the popular Public Provident Fund (PPF), which had been hiked to 7.9% ahead of the previous general election, remain frozen for yet another quarter at 7.1%.
While this marks the sixth successive quarter of hikes in select small savings schemes, the PPF rate has been unchanged since April 2020. The return on the SSAS was also held at 7.6% from April 2020, but was hiked to 8% in April this year. The returns on the PPF and the SSAS are tax-free.
As per the Reserve Bank of India (RBI), the PPF return should have been pegged at 7.51% for the October to December 2023 quarter, as per the formula-based rates regime for small savings schemes adopted in 2016.
The RBI, in its monetary policy report for October, had also noted that returns on 5-year Recurring Deposit (RD) accounts, should have been 6.91% for this quarter. However, those rates have also been left unchanged at 6.7% for the upcoming January to March 2024 period.
Small savings schemes’ rates for the next quarter, as per the adopted formula, are linked to the government bond yields prevailing between September and November 2023 for securities of matching maturities.
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