The government on Friday increased the interest rate on the five-year deposit scheme by 20 basis points for the October-December quarter. The interest has been increased from 6.5% to 6.7%. All other small savings instruments offer the same interest rates.
The revised rates were announced on September 29 by the Ministry of Economic Affairs of the Ministry of Finance. “The interest rates on various small savings schemes for the third quarter of the financial year 2023-24 commencing October 1, 2023 and ending December 31, 2023 have been revised,” the office memo said.
According to the notification, only the interest rate for the five-year deposit scheme has been increased. The savings program will continue to offer an interest rate of 4%, while the one-, two- and three-year recurring deposit programs will continue to offer interest rates of 6.9%, 7% and 7%.
There is an interest rate of 8.2% on the senior savings program and 7.4% on the monthly income account program. Other schemes with unchanged interest rates include National Savings Certificate, Public Provident Fund Scheme, Kisan Vikas Patra and Sukanya Samriddhi Account Scheme.
Government bond yields rose on Thursday, with the benchmark yield posting its biggest gain in a single session this year. The 10-year benchmark 7.18% ended at 7.2414% after finishing at 7.1704% in the previous session. The biggest single-session increase was recorded since November last year, Reuters reported.
The interest rates on small savings programs are determined by the government and depend on market yields on government bonds.