Small savings schemes’ interest rates are hiked up to 40bps

The government has hiked the interest rates up to 40bps of small savings schemes for the 3^rd quarter i.e. Oct 01, 2018 to Dec 31, 2018 following the rise in the government bond yields. The hike is in-line with the recent hikes in interest rates by RBI.

The small saving schemes include, PPF, NSC, Sukanya Samriddhi Yojana and post office time deposits. The government has increased the 1-year, 2-year and 3-year time deposit interest rates by 30 basis points. Interest rate on 5-year time deposit, Sukanya Samriddhi Scheme, Senior Citizen Saving Scheme, NSC and PPF are increased by 40 basis points.

This will bring some relief to fixed income investors as the fixed deposits interest rates in banks are around 6-7.5%.

Below table exhibits the change in the interest rates of small saving schemes

Instrument	Rate of Interest (%) w.r.t July 01, 2018 to Sep 30, 2018	Rate of Interest (%) w.r.t Oct 01, 2018 to Dec 31, 2018	Compounding Frequency*
Savings Deposit	4.0	4.0	Annually
1 year Time Deposit	6.6	6.9	Quarterly
2 year Time Deposit	6.7	7.0	Quarterly
3 year Time Deposit	6.9	7.2	Quarterly
5 year Time Deposit	7.4	7.8	Quarterly
5 year Recurring Deposit	6.9	7.3	Quarterly
5 year Senior Citizen Savings Scheme	8.3	8.7	Quarterly and Paid
5 year Monthly Income Account	7.3	7.7	Monthly and Paid
5 year National Savings Certificate	7.6	8.0	Annually
Public Provident Fund Scheme	7.6	8.0	Annually
Kisan Vikas Patra	7.3 (will mature in 118 months)	7.7 (will mature in 112 months)	Annually
Sukanya Samriddhi Account Scheme	8.1	8.5	Annually

*No change
Source: Finance ministry website