Bank FD Vs PPF, Post Office Deposits, Senior Citizens Savings: Which One Offers Highest Returns?

Bank FD Vs Small Savings Schemes: At a time when the RBI MPC is expected to keep the repo rate unchanged next week, the government has also retained interest rates on most small savings schemes, including PPF, Senior Citizens Savings Schemes, Sukanya Samriddhi Yojana and post office time deposits. Only 5-year recurring deposits have seen a hike of 20 basis points from 6.5 per cent to 6.7 per cent.

“The rates of interest on various small savings schemes for the third quarter of the financial year 2023-24 starting from October 1, 2023, and ending on December 31, 2023, have been revised,” the finance ministry said in the notification.

Latest Interest Rates On Small Savings Schemes for October-December 2023:

Savings Deposit: 4 per cent

1-Year Post Office Time Deposits: 6.9 per cent

2-Year Post Office Time Deposits: 7.0 per cent

3-Year Post Office Time Deposits: 7 per cent

5-Year Post Office Time Deposits: 7.5 per cent

5-Year Recurring Deposits: 6.7 per cent (6.5 per cent earlier)

National Saving Certificates (NSC): 7.7 per cent

Kisan Vikas Patra: 7.5 per cent (will mature in 115 months)

Public Provident Fund: 7.1 per cent

Sukanya Samriddhi Account: 8.0 per cent

Senior Citizens Savings Scheme: 8.2 per cent

Monthly Income Account: 7.4 per cent.

So, the interest rates on the small savings schemes range between 4 per cent (post office savings deposits) and 8.2 per cent (Senior Citizen Savings Scheme), according to the notification.

Latest Interest Rates On Bank FDs

HDFC Bank is offering up to 7.75 per cent interest rates on fixed deposits below Rs 2 crore, depending upon deposit tenure and depositor’s age. ICICI Bank is offering FD rates up to 7.60 per cent annually and PNB is giving up to 7.75 per cent a year. SBI is offering FD rates up to 7.50 per cent annually.

Current Inflation Rate In India

Inflation in August remained beyond the RBI’s upper tolerance limit at 6.83 per cent, but significantly lower than its peak of 7.44 per cent in July. This was largely on the back of an increase in global crude oil prices and high food inflation.

What Are Small Savings Schemes?

Small savings schemes are fixed-income instruments guaranteed by the government. They are divided into three categories — savings deposits, social security schemes and monthly income plan.

Saving deposits include 1-3-year time deposits and 5-year recurring deposits. These also include saving certificates such as National Saving Certificates (NSC) and Kisan Vikas Patra (KVP). Social security schemes include Public Provident Fund (PPF), Sukanya Samriddhi Account and Senior Citizens Savings Scheme. The monthly income plan includes the Monthly Income Account.

When and How Their Interest Rates Are Revised?

Interest rates on small savings schemes are reviewed at the end of every quarter and are decided for the next quarter accordingly. The interest rate review is done on the basis of G-Sec yields of the previous quarter (July-September 2023 in the latest case).

In the previous review on June 30, 2023, the government hiked interest rates on several small savings schemes — 1-year & 2-year post office time deposits and 5-year recurring deposits. It was the fourth hike since September 2022, when the government raised interest rates on some small savings schemes for the October-December 2022 quarter, after keeping it unchanged for nine consecutive quarters — from the second quarter of 2020-21 to the second quarter of 2022-23.