Interest rates on two small savings schemes hiked for Jan-Mar 2024

The central government has raised the interest on two small savings scheme for January-March 2024 by 10-20 basis points.

While the interest rate on three-year time deposit has been increased by 10 basis points to 7.1 per cent from 7.0 per cent, the interest on the Sukanya Samriddhi Account Scheme has been hiked by 20 basis points to 8.2 per cent for January-March 2024.

There is however no change in interest rates of all other small savings schemes and they will continue to offer the same rate of interest as they did in October-December 2022, according to Finance Ministry.

One basis point is one-hundredth of a percentage point.

In India, Small savings interest rates are set by the government and are linked to market yields on government securities at a spread of 0-100 basis points over the yield of these securities of comparable maturities. 

Whenever market yields on government securities go up, interest rates on small savings schemes need to also be increased.

In September-November 2023, which is the reference period for small savings interest rates for January-March 2024, the yield on five-year government bonds rose by around 10 basis points, while 10-year bond yields rose by 15 basis points, official data showed.

It maybe recalled that the finance ministry started raising small savings interests in October-December 2022 after leaving them unchanged for nine consecutive quarters.

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