In the report released by the Reserve Bank of India, it has been said that the interest rates of the Small Saving Scheme are 1.68 percent higher. Due to which the interest rate may come down in the first quarter of the new financial year.
Amidst rising interest rates on fixed deposits, the Reserve Bank of India has claimed that the interest rates of small savings schemes are quite high. The Government of India reviewed interest rates on Small Savings Instruments on December 31, 2021 and did not change interest rates for the seventh consecutive quarter. RBI in its State of the Economy report has said that the current interest rates on SSI are 0.42 per cent to 1.68 per cent higher than the formula-based rates for the fourth quarter of FY 2021-22.
In recent months, some major banks including SBI, HDFC Bank, ICICI Bank, Bank of Baroda, Axis Bank have started raising interest rates on fixed deposits. RBI said in its report that private banks are paying more interest in fixed deposit rates than public sector banks. In recent months, some major banks have started raising interest rates on deposits, anticipating a surge in credit demand.
Small savings rates may come down
The government is expected to cut interest rates on March 31 as part of a review of interest rates on small savings schemes for the first quarter of 2022-23. In these schemes, interest rate of 7.1 percent is being given on PPF, 7.6 percent on Sukanya Samriddhi Account, 7.4 percent per annum interest rate is being given on Senior Citizen Savings Scheme. Other small savings schemes include Post Savings Account with an interest rate of 4 per cent per annum, 5-year Post Office Recurring Account with an interest rate of 5.8 per cent per annum, Post Office Time Deposit Scheme 5.5 per cent, Post Office Term Deposit Scheme at 6.7 per cent. Interest rate, interest rate of 6.6 per cent per annum is available on Post Office Monthly Income Saving Scheme, 6.8 per cent on National Saving Certificate and 6.9 per cent on Kisan Vikas Patra.
EPF rates hit a 40-year low
The Employees’ Provident Fund Organization (EPFO) recently cut interest rates on EPF to a four-decade low of 8.1 per cent for the financial year 2021-22, from 8.5 per cent in the previous year. The Central Board has recommended a rate of interest of 8.10 per cent per annum on EPF accumulation in the accounts of members for the financial year 2021-22 (ending March 31, 2022), the labor ministry statement said.