Sr citizens’ savings plan made more attractive
The finance ministry on Thursday announced an increase of up to 30 basis points in interest rates on certain small savings products for the next quarter. Amid falling rates, the Centre had left small savings rates unchanged due to high inflation and the need to ensure stability amid the Covid-19 pandemic. Some of the changes seem to have been guided by how banks have responded to the hike in policy rates by the RBI with further increase expected on Friday after a meeting of the monetary policy committee.
For instance, the repricing of two- and three-year post office deposits will match the rates being offered by State Bank of India on deposits with similar maturity. Of course, senior citizens who are entitled to a 50 basis point higher rate, are still better off, although that edge may go away in the next few months as bank deposit rates are projected to rise further.
Similarly, the Senior Citizens Savings Scheme has been made more attractive, given that those over 60 years may have been impacted by higher inflation.
While data for the last few years was not immediately available, the Monthly Income Accounts Scheme (Rs 40,000 crore in FY18) had received just a tad higher deposits than the Senior Citizens Savings Scheme (Rs 39,000 crore), according to numbers on the National Small Savings Institute. KVPs had gross receipts of a little under Rs 25,000 crore while PPF had mopped up nearly Rs 93,000 crore.
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