Hike rates

Will the government raise rates for the September term?

PEA interest rate: Stock markets and cryptocurrencies have been volatile lately, with traders taking huge losses in multiple sessions. This is due to the risky nature of these assets, and now investors are forgoing investing in new stocks and crypto coins while looking to put their money into programs that would give them a guaranteed return. Small post office savings plans are very reliable as they are backed by the government and are not subject to stock market movements. This includes Sukanya Samriddhi Yojana, the old people’s savings scheme or the public provident fund, which have a fixed rate of return. The rates for these postal schemes are likely to be increased today.

PPF, SSY, will interest rates for seniors go up?

Smaller savings schemes, including postal savings schemes like the PPF, SSY and the Savings Scheme for the Aged, have their interest rates set by the government at the start of each quarter. This means that the government will notify the new rates today. The government may consider changing the interest rates of the PPF, NSC or SSY schemes in June, which would benefit investors in these schemes. The Center announces new tariffs for postal savings at the end of each quarter. June 30 marks the end of the first quarter of fiscal year 22-23. Over the past few months, the government has kept interest rates unchanged.

Current interest rates on Postal Savings Plans including PPF, SSY

Here are the current PEA interest rates, which went into effect on April 1 of this year and will run until today, June 30.

I. Public Provident Fund: 7.1%

ii. National Savings Bond: 6.8%

iii. Sukanya Samriddhi Yojana: 7.6%

iv. Kisan Vikas Patra: 6.9%

v. Savings deposit: 4%

vi. One-year term deposit: 5.5%

vii. 2-year term deposit: 5.5%

viii. 3-year term deposit: 5.5%

ix. 5-year term deposit: 6.7%

X. Recurring deposit over 5 years: 5.8%

xi. Savings plan for 5-year-olds: 7.4%

xii. 5-year monthly income account: 6.6%

Calculation of post office interest rates

The Gopinath Committee in 2011 established a formula to calculate interest rates for small savings. Depending on the formula, these rates should be 25 to 100 basis points higher than the average yields provided by government securities for the same period. Over the past year, the yield on 10-year bonds has increased by 140 basis points, from 6.04% to 7.46%, with the average rate for the April-June quarter being 7.31%. According to the recommendations of the Gopinath committee, the PPF rates should be raised to 7.81%, while the Sukanya Samriddhi Yojana and Senior Citizens Savings scheme should provide more than 8% interest. The government, however, cannot raise rates under this formula.

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