PPF, Post Office FDs, NSC: Should You Invest? Check Comparison With Bank FD


Small savings interest rates Vs bank FD. (Representative image)

Small savings schemes have three categories — savings deposits, social security schemes and monthly income plans

Investors looking for fixed-income investment options have various options available. Fixed deposits is the most common one. However, there are other options like small savings schemes, including public provident fund, national savings certificates and post office deposits, etc, that offer fixed returns and are backed by the government. Here’s the comparison of interest rates between bank FD and small savings schemes.

Latest Interest Rates On Small Savings Schemes:

The interest rates for the current quarter October-December 2023 are as follows:

Savings Deposit: 4 per cent

1-Year Post Office Time Deposits: 6.9 per cent

2-Year Post Office Time Deposits: 7.0 per cent

3-Year Post Office Time Deposits: 7 per cent

5-Year Post Office Time Deposits: 7.5 per cent

5-Year Recurring Deposits: 6.7 per cent (6.5 per cent earlier)

National Saving Certificates (NSC): 7.7 per cent

Kisan Vikas Patra: 7.5 per cent (will mature in 115 months)

Public Provident Fund: 7.1 per cent

Sukanya Samriddhi Account: 8.0 per cent

Senior Citizens Savings Scheme: 8.2 per cent

Monthly Income Account: 7.4 per cent.

Latest Interest Rates On Bank FD

Among the major banks, HDFC Bank is offering up to 7.75 per cent interest rates on FD, depending upon deposit tenure and depositor’s age. PNB is offering FD rates up to 7.75 per cent annually and SBI is giving up to 7.50 per cent a year.

What Are Small Savings Schemes?

These are savings instruments managed by the government to encourage citizens to save regularly. The small savings schemes have three categories — savings deposits, social security schemes and monthly income plans.

Saving deposits include 1-3-year time deposits and 5-year recurring deposits. These also include saving certificates such as National Saving Certificates (NSC) and Kisan Vikas Patra. Social security schemes include the Public Provident Fund, Sukanya Samriddhi Account and Senior Citizens Savings Scheme. The monthly income plan includes the Monthly Income Account.

For the October-December 2023 quarter, the government kept the interest rates unchanged on small savings schemes, including PPF, Sukanya Samriddhi, Senior Citizens Savings Schemes and post office time deposits. Only 5-year recurring deposits saw a hike in interest rate by 20 basis points to 6.7 per cent.

Interest rates on small savings schemes are reviewed at the end of every quarter and are decided for the next quarter accordingly. In the last review on June 30, 2023, the government hiked interest rates on several small savings schemes — 1-year & 2-year post office time deposits and 5-year recurring deposits.

It was the fourth hike since September 2022, when the government raised interest rates on some small savings schemes for the October-December 2022 quarter, after keeping it unchanged for nine consecutive quarters — from the second quarter of 2020-21 to the second quarter of 2022-23.

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