Small Savings rates kept unchanged for July-September 2018 The Government reviews the rates on small savings every quarter and the new rates are announced at the start of each quarter. Accordingly, the government has announced the rates for July-September 2018 which are the same as the rates in April-June 2018. In fact, most rates on small savings schemes have been held constant since Jan 2018.

A hike in rates in the face of rising inflation and overall interest rates may be overdue. However, it is important to note that small savings scheme rates are higher than most bank fixed deposit rates. The rates are as follows:

Instrument Interest Rate %

(July – Sept 2018)

Compounding Frequency
Post Office Deposits
Savings deposit 4 Annually
1-year time deposit 6.6 Quarterly
2-year time deposit 6.7 Quarterly
3-year time deposit 6.9 Quarterly
5-year time deposit 7.4 Quarterly
5-year recurring deposit 6.9 Quarterly
Other Savings Instruments
5 year Senior Citizens’ Savings Scheme 8.3 Quarterly and paid
5 year Post Office Monthly Income Scheme 7.3 Monthly and paid
5 year National Savings Certificate 7.6 Annually
Public Provident Fund 7.6 Annually
Kisan Vikas Patra 7.3 Annually
Sukanya Samriddhi Scheme 8.1 Annually

Banks have raised the deposit and borrowing rates multiple times over the past two quarters as we note here, although they remain short of the rates on most small savings schemes. The benchmark 10-year bond yield (the rate paid by the government to the debt market) has also gone up from 7.2% to 7.9% since Jan 2018. There is hence mounting pressure on the government to raise the rates on small savings schemes as well. However, this has been avoided for the current quarter (July – September 2018)

Author
Neil Borate

Neil Borate is Deputy Editor, RupeeIQ. He can be contacted at neil@rupeeiq.com.