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Breaking Down the Latest Interest Rate Hike for Small Savings Schemes

Updated: Apr 15, 2023

The Finance Ministry has announced an increase in interest rates for small saving schemes for the April-June 2023 quarter. Shall we delve into the details?

Firstly, let us gain an understanding of what these schemes entail.

Dissecting the Fundamentals of Small Savings Schemes

Small Savings Schemes are financial tools offered by the government to motivate individuals to save their money regularly. The schemes can be categorized into three types, namely savings deposits, social security schemes, and monthly income plans. Savings deposits involve a range of options such as 1-3 year time deposits, 5-year recurring deposits, and saving certificates like 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, while the monthly income plan comprises the Monthly Income Account.

The interest rates for well-known schemes such as PPF and savings deposits have not changed and remain at 7.1 percent and 4 percent, respectively. However, the latest interest rates for other savings schemes have gone up by a margin of 0.1 percent to 0.7 percent.

A detailed account of schemes and their corresponding latest interest rate hike:

The National Savings Certificate (NSC) saw the highest increase in interest rates, rising from 7% to 7.5% from April 1 to June 30, 2023. Furthermore, the interest rate for the Senior Citizen Savings Scheme advanced from 8% to 8.2%, while the interest rate for Kisan Vikas Patra (KVP) increased from 7.2% to 7.6%. Besides, the maturity period for KVP has decreased from 120 months to 115 months. The Sukanya Samriddhi savings scheme, which is for girls, has increased its interest rate from 7.6% to 8%.

It is worth noting that interest rates for small savings schemes get notified quarterly.

Following the revision, post office term deposits will now offer a higher interest rate. For a one-year term deposit, the rate will be 6.8% (previously 6.6%). For a two-year term deposit, the rate will be 6.9% (previously 6.8%). For a three-year term deposit, the rate will be 7% (previously 6.9%). Finally, for a five-year term deposit, the rate will be 7.5% (previously 7%).

Here is a table summarizing the new interest rates for various savings and investment options:

​Savings/Investment Option

Interest Rate

Savings Deposit


1-Year Post Office Time Deposits


2-Year Post Office Time Deposits


3-Year Post Office Time Deposits


5-Year Post Office Time Deposits


National Saving Certificates


Kisan Vikas Patra


Public Provident Fund


Sukanya Samriddhi Account


Senior Citizens Savings Scheme


Monthly Income Account


Note: Kisan Vikas Patra matures in 115 months, which is equivalent to 9 years and 7 months. Banks have increased their deposit interest rates in response to the Reserve Bank's action of raising the benchmark lending rate by 2.5% to 6.5% since May. The RBI has increased the benchmark rate by the same percentage since May of the previous year. With inflation and interest rates on the rise, it's crucial to increase small savings rates to safeguard savers, particularly senior citizens. We'll keep a close eye on how the latest interest rates pan out and keep you informed.

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