Small Savings Scheme To See Interest Rate Cut In July qtr: Here’s What Investors Should Do

For small savings schemes such as PPF, NSC- which are also the most sought after considering the sovereign backing and the higher returns, the rates are announced every quarter. After leaving the rates steady for quite a while now, it is highly likely that rates shall see a decrease for the July-September quarter.

The rate on small savings schemes are pegged to the yield on 10-year benchmark bonds. There has a gross addition of these small savings scheme as per the RBI data from the Q3 period to Q4 period of FY21.

Currently the rates on the various small savings scheme are as following PPF-7.1%, 5 year term deposit-6.7%, SCSS- 7.4%, MIS-6.6%, NSC-6.8%, KVP- 6.9%, SSY-7.6%.

The government may fine tune the rates this time to boost consumption and give a push to the economic growth in the country which has contracted 7.3% in FY21.

Notably, for schemes such as Post office deposits, NSC, KVP, RD, SCSS, the interest rate earned by the investor are the contracted rates, while in case of PPF, SSY, the balance shall earn the revised or new rates

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