PPF, NSC, Sukanya Samridhhi Account Offering Better Returns Than Bank FDs? Check Details

Several banks have recently raised their interest rates on fixed deposits. After the hikes, FDs are now giving slightly more returns than earlier. However, small savings schemes are still offering attractive returns. Small savings schemes, including PPF, senior citizen savings scheme, National Savings Certificate and Sukanya Samriddhi Account Scheme, are currently offering interest rates up to 7.6 per cent, while major banks like PNB, SBI and HDFC Banks are providing an interest rate of around 6 per cent on FDs.

What Are Small Savings Schemes?

Small Savings Schemes are savings instruments managed by the government to encourage citizens to save regularly. The schemes include post office saving deposits, 1-3-year time deposits, and 5-year recurring deposits. These also include saving certificates such as National Saving Certificates and Kisan Vikas Patra.

It also comprises social security schemes Public Provident Fund, Sukanya Samriddhi Account and Senior Citizens Savings Scheme. The Monthly Income Account is also covered under the schemes.

Current Interest Rates On Small Savings Schemes

As the Interest rates on small saving schemes are reviewed on a quarterly basis, the government had kept them unchanged in the last review on June 30. The revision happens based on the movement in benchmark government bonds of similar maturity.

The post office savings deposits offer an interest rate of 4 per cent per annum. Time deposits of the tenure 1-3 years are currently offering 5.5 per cent per annum. Five-year time deposits are giving a return of 6.7 per cent a year. Five-year recurring deposits can earn 5.8 per cent a year interest.

National Saving Certificates and Kisan Vikas Patra are offering annual interest rates of 6.8 per cent and 6.9 per cent, respectively.

Public Provident Fund, Sukanya Samriddhi Account, and Senior Citizens Savings Scheme are earning annual returns of 7.1 per cent, 7.6 per cent and 7.4 per cent, respectively.

The Monthly Income Account is offering 6.6 per cent per annum interest.

The interest rates are expected to be revised by the end of this month. In the last review at the end of the June 2022 quarter, the government had kept the interest rates unchanged. “The rates of interest on various small savings schemes for the second quarter of the financial year 2022-23, starting from July 1, 2022, and ending on September 30, 2022, shall remain unchanged from those notified for the first quarter (April 1, 2022, to June 30, 2022) for FY 2022-23,” the finance ministry had said.

Interest Rates on FDs

Several banks have revised upwards their interest rate offerings on deposits as well as loans. It comes as the interest rates in the country are on the rise as the RBI’s Monetary Policy Committee (MPC) has hiked the key repo rate thrice in its last three policy review meetings.

On fixed deposits below Rs 2 crore, State Bank of India is offering interest rates in the range of 2.90 per cent to 5.65 per cent for general public, depending upon the tenure of the FD. HDFC Bank is offering 2.75 per cent-6.1 per cent, while PNB offers 3 per cent-5.75 per cent.

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