Interest rates raised on select small savings schemes for Jan-Mar
What's the story
The Government of India has announced an uptick in interest rates for two small savings schemes in the January-March 2024 quarter.
The three-year time deposit interest rate has been boosted by 10 basis points to 7.1%. Meanwhile, the Sukanya Samriddhi Account Scheme's rate has jumped by 20 basis points to 8.2%.
This marks the sixth consecutive quarter of hikes in interest rates for these financial instruments.
Details
Other small savings schemes remain unchanged
Despite the rate hikes for these specific schemes, all other small savings schemes will maintain their current interest rates from the October-December period.
Notably, the Public Provident Fund (PPF) interest rate remains steady at 7.1%.
The government reviews the interest rates on small savings schemes every quarter. It follows the Shyamala Gopinath Committee's recommendations for determining the rates.
What Next?
Interest rates linked to market yields on government securities
The government-determined small savings interest rates are linked to market yields on government securities, with a spread of 0-100 basis points over the yield of comparable-maturity securities.
As the market yields on government securities fluctuate during the reference period, interest rates on small savings schemes should adjust accordingly.
Established formulas dictate mark-ups over the average yield of relevant G-Secs with comparable maturity from the previous three months.