New Delhi: The interest rate offered to subscribers of the Employees’ Provident Fund (EPF) was recently reduced to 8.1% for 2021-22 from the 8.5% rate credited to investors’ accounts in the last two years. However, on the bright side, several banks have increased the interest rate offered on fixed investments (FDs).
According to the Reserve Bank of India (RBI), the interest rates on small savings schemes are currently higher than fixed deposits (FDs). In a report titled ‘State of the Economy’, the central bank noted that the Centre reviewed interest rates on small saving instruments (SSIs) on December 31, 2021, and left them unchanged for the seventh straight quarter.
“The current interest rates on SSIs are 42-168 bps higher than the formula-based rates for Q4:2021-22,” the RBI added in its report. However, the government is now likely to review the interest rates on small savings schemes for Q1 FY23 on 31 March 2022.
In the past few weeks, all major private and public banks have increased interest rates on fixed deposit investments. These banks include State Bank of India, HDFC Bank, ICICI Bank, Bank of Baroda, and Axis Bank, among others. Also Read: FIFA World Cup 2022: BYJU’S named as official sponsor of tournament in Qatar
The RBI said that the private banks continue to exhibit higher pass-through to term deposit rates compared to their public sector counterparts. “In recent months, a few major banks have started raising interest rates on deposits, anticipating a pick-up in credit demand,” the RBI added. Also Read: Harsh Goenka shares list of “Biggest Career Mistakes”; are you making any?
Here’s a list of small saving schemes offering more than 7% annual returns:
Public Provident Fund Account (PPF) – 7.1% interest rate.
Sukanya Samriddhi Accounts – 7.6% interest rate.
Senior Citizen Savings Scheme (SCSS) – 7.4 % interest rate.
Other Small Savings Schemes
Post Office Savings Account (SB) – 4% interest rate
5-Year Post Office Recurring Deposit Account (RD) – 5.8% interest rate
Post Office Time Deposit Account (TD) – 5.5% – 6.7% interest rate
Post Office Monthly Income Scheme Account (MIS) – 6.6% interest rate