PPF and Sukanya Samriddhi interest rates kept unchanged; 1-year post office time deposits interest hiked

The interest rate on 1-year post office time deposits, a small savings scheme, has been increased by 10 basis points (bps) for the January-March, 2019 quarter. According to a circular issued by the Finance Ministry, interest rates of other small savings schemes like Public Provident Fund (PPF) and Sukanya Samriddhi Yojana (SSY) have been kept unchanged.

The new rates
One year POTD will now fetch 7 per cent, up from 6.9 percent for the previous quarter. The interest rate on three-year POTD has been reduced by 20 bps to 7 per cent.


Interest rate on two year and five year POTD has been kept unchanged at 7 percent and 7.8 percent respectively.

Interest rates on small savings scheme for quarter ending March 31, 2019

Instrument	Rate of Interest w.r.t 01.10.2018 to 31.12.2018	Rate of Interest w.r.t 01.01.2019 to 31.03.2019	Compounding Frequency*
Savings Deposit	4	4	Annually
1 year Time Deposit	6.9	7	Quarterly
2 year Time Deposit	7	7	Quarterly
3 year Time Deposit	7.2	7	Quarterly
5 year Time Deposit	7.8	7.8	Quarterly
5 year Recurring Deposit	7.3	7.3	Quarterly
5 year Senior Citizen Savings Scheme	8.7	8.7	Quarterly and Paid
5 year Monthly Income Account	7.7	7.7	Monthly and Paid
5 year National Savings Certificate	8	8	Annually
Public Provident Fund Scheme	8	8	Annually
Kisan Vikas Patra	7.7 (will mature in 112 months)	7.7 (will mature in 112 months)	Annually
Sukanya Samriddhi Account Scheme	8.5	8.5	Annually

*No change
Source: National Savings Institute India website

Interest on other small savings schemes such as Senior Citizen Savings Scheme (SCSS), Kisan Vikas Patra (KVP) and others have also been kept unchanged. SCSS will continue to fetch 8.7 per cent whereas KVP will fetch 7.7 per cent.

In the previous quarter, government had hiked the interest rate between 30 bps and 40 bps on various small savings scheme.

The interest rates on these schemes have been benchmarked to the yields of government bonds of the same maturity. The interest rate is calculated by adding up a mark-up to the average of the government yield of the previous quarter.

The formula was given by the Shyamala Gopinath Committee to determine the interest rates of the schemes. The committee had suggested that the interest rates of different schemes should be 25 -100 bps higher than the yields of the government bonds of similar maturity.