Small Saving Scheme- PPF, Sukanya Samriddhi, Senior Citizen Savings Scheme Interest in 2023

Due to multi-year low rates and rising interest rates, the appeal of Senior Citizen Savings Scheme (SCSC), Kisan Vikas Patra, Public Provident Fund (PPF), and Sukanya Samriddhi Yojana (SSY) has decreased. While schemes like SCSC and SSY are aimed at specific investors, they continue to provide subpar returns.

SCSC is a government-sponsored social security programme that provides a safety net through quarterly interest payments. The scheme allows elderly people to save money for their retirement years. Experts predict that small savings schemes such as public provident fund (PPF), National Saving Certificates (NSC), and Sukanya Samriddhi Yojana (SSY) will be revised upwards for the January-March 2023 quarter. This could be due to the Reserve Bank of India (RBI) continuing with its repo rate hike cycle. Bond yields have also recently increased.

Most small savings plans remains unchanged

The current SCSC interest rate of 7.6%, effective for the third quarter of 2022, was raised by the Finance Ministry in a circular issued on September 29 by 20 basis points from 7.4%. Interest rates on two other small savings schemes, Kisan Vikas Patra (KVP) and Post Office (PPO) time deposits, were raised by 10 basis points to 30 basis points. Other well-known schemes, such as the Public Provident Fund (PPF) and the Sukanya Samriddhi Yojana (SSY), remained unchanged at 7.1% and 7.6%, respectively. PPF rates, which reached a high of 8% in 2019, were reduced to 7.1% in the April-June 2020 quarter and have remained constant since.

Recent interest rate increases at SCSC, PPO, and KVP

Following back-to-back repo rate hikes by the RBI, the government raised interest rates on SCSC, KVP, and PPOs by 10-30 basis points in October 2022. Since then, the Fed has raised interest rates by another 35 basis points. If no changes are made in the next review, the most recent SCSC interest rate for October-December will be applicable in the first quarter of Fiscal Year 2023-23 (FY23). On a quarterly basis, the government examines the interest rates offered on small savings schemes.

SCSC investors profited by 8.7% for three quarters, from October to December 2018 to April to June 2019. Following that, small savings scheme interest rates were reduced in line with declining repo rates, which reached a historic low of 4% in May 2020. Since then, the RBI has raised the repo rate by 225 basis points, but the Central Government has kept small savings rates largely unchanged, with the exception of a token increase on the three schemes mentioned above in October 2022.

Interest rates for PPF, SCSC, and SSY in 2023

The government will decide on the interest rates for PPF, SCSC, and SSY in the upcoming quarterly review by the end of December 2022. This will be in effect for the first three months of 2023, until the next quarterly review.