The government on Thursday opted to keep interest rates on small savings instruments like public provident funds unchanged from April to June 2022, maintaining status quo for the eighth consecutive quarter.
The Reserve Bank of India had indicated the need to reduce interest rates on these schemes by between 0.09 and 1.18 percentage points in the coming quarter. However, a resurgence of inflation to over 6% in the past two months and a rise in oil prices may have weighed against taking an unpopular move, especially to reduce the Employees’ Provident Fund rate from 8.5% to 8.1% for 2021-22. after. This month, the lowest in 42 years.
Rates on various small savings schemes were last reduced in the range of 0.5 and 1.4 percentage points in April 2020, and further cuts announced on March 31, 2022 from 0.4% to 1.1%, were canceled till April 1. Was.
The quarterly interest rate paid on one-year fixed deposits remains 5.5%, Senior Citizen Savings Scheme will continue to earn 7.4%, while Sukanya Samriddhi Account Scheme returns 7.6%. PPF return will remain at 7.1%.
ICRA Chief Economist Aditi Nair said small savings rates could be hiked in the latter part of the year after the central bank expected rate hikes during August and October.
He said, “With the increase in yield on government securities as well as increase in deposit rates of banks in the last three months, we had anticipated a small possibility of an upward revision of small savings rates for the coming quarter.” ”