Small Savings and Post Office Schemes comes under the category of National Savings Schemes (NSSs). These schemes are regulated by the ministry of finance under Government of India. These small savings schemes offer a secured investment platform for the rural populace of India, owing to the very simple reason that it is mainly distributed through Post offices of rural areas.
Small Savings Scheme Interest rates – How it is regulated.
As per the new norms introduced on April 2016, the interest rates of Small Savings Schemes are linked to the yield of government bonds of comparable maturity.
The interest rates of government Bonds (G-Sec) and the Small Savings interest rates are linked using a specialised term called Spread.
In order to understand spread let us take an example.
Sukanya Samriddhi Scheme is having a spread of 75 basis points over and above the Government Bond rate.
One basis point = 0.01% of interest rate
So 75 basis points means 0.75% over and above the interest rate of Government Bonds.
|Current Spread of Small Savings Schemes 2017- 2018|
|Name of Scheme||Basis Points||Interest spread|
|Sukanya Samriddhi Yojana||+ 75||0.75%|
|Senior Citizen Savings Scheme||+ 100||1 %|
|Monthly Income Scheme||+ 25||0.25%|
|Public Provident Fund (PPF)||+ 25||0.25%|
|Five-year term deposit||+ 25||0.25%|
|Five Year National Savings Certificate (NSC)||+ 25||0.25%|
|One Year Term Deposit||0||0.00%|
|Two Year Term Deposit||0||0.00%|
|Three Year Term Deposit||0||0.00%|
|Kisan Vikas Pathra (KVP)||0||0.00%|
|5 Year Recurring Deposits||0||0.00%|
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Small Savings and Post office Schemes – Interest Rates 2017 -18
Government Of India has decided to review the interest rates of Small Savings schemes on quarterly basis, with effect from 1 st April 2016. So the interest rates are getting revised on every quarter starting from March.
The latest revision was done on 30 th June 2017 and the rates applicable are as follows.
|Interest Rates – Small Savings Schemes|
|Instrument||Rate of Interest w.r.t
1/4/2017 to 30/06/2017
|Current Rate of Interest
|1 Year Time Deposit||6.9||6.8||Quarterly|
|2 Year Time Deposit||7.0||6.9||Quarterly|
|3 Year Time Deposit||7.2||7.1||Quarterly|
|5 Year Time Deposit||7.7||7.6||Quarterly|
|5 Year Recurring Deposit||7.2||7.1||Quarterly|
|5 Year Senior Citizen Savings Scheme||8.4||8.3||Quarterly|
|5 Year monthly income account||7.6||7.5||Monthly|
|5 Year National Savings Certificate (NSC)||7.9||7.8||Annually|
|Public Provident Fund Scheme (PPF)||7.9||7.8||Annually|
|Kisan Vikas Pathra (KVP)||7.6 (Will mature in 113 months)||7.5 (Will mature in 115 months)||Annually|
|Sukanya Samriddhi Account Scheme||8.4||8.3||Annually|
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Anish L J is a ‘Financial Planner’ and member of Chartered Insurance Institute(CII), London and Insurance Institute of India. He is also a finance, insurance and software consultant. He thoroughly follows the developments in finance, insurance, and other related sectors.