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The Centre on Monday (September 30, 2024) decided to maintain the same rate of return on small savings schemes for the October to December quarter, marking the third successive quarter of status quo on their rates.

The interest rates on small savings schemes such as Public Provident Fund (PPF) and National Savings Certificate (NSC) are reset each quarter as per a formula linked to the yields on government securities of similar maturities.

The PPF rate has been frozen at 7.1% since April 2020. The return on Sukanya Samriddhi Account Scheme, which is tax-free like PPF, was raised to 8.2% earlier this year.

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| Photo Credit: Getty Images

The government has raised the returns on five-year recurring deposits from 6.5% to 6.7% for the October to December 2023 quarter, but left the returns on all other Small Savings schemes unchanged.

While this constitutes the fifth successive hike in the returns on select small savings schemes, that are reset every quarter, the Public Provident Fund (PPF) rate has not been hiked since January 2019. The last time the PPF rate was tweaked, in April 2020, it was slashed from 7.9% to 7.1%.

For the July to September quarter, the government had raised interest rates on three of 12 small savings schemes by 10 to 30 basis points, with the 5-year recurring deposits raised from 6.2% to 6.5%. One basis point equals 0.01%.

The Senior Citizens Savings Scheme, the Sukanya Samriddhi Account Scheme and the National Savings Certificate (NSC) will continue to yield the highest returns among small savings instruments, at 8.2%, 8% and 7.7%, respectively.