Sunday, November 27, 2022


The government has held Small Savings Scheme interest rates fixed for the next quarter. Between January and March, the interest rates will stay the same.

In the recent interest rate environment, small savings schemes are the most suitable option for conventional investors who don’t invest in equities and want to put money in goods backed by the government.

“Besides conventional investors, even others can have a share of their debt portfolio in the Small Savings Scheme,” said Malhar Majumder, partner, Positive Vibes Consulting and Advisory, a firm that distributes financial products.


The interest rates on long-term FDs from public sector banks (PSBs) are below what Post Office Savings Schemes offer, according to banks’ websites.

State Bank of India gives between 5.3% and 5.4% rates for FDs between three and 10 years. For the equal period, Canara Bank rates are 5.5%, and Punjab National Bank gives 5.25%.

On its fixed deposits of three and five years, the Post Office offers 5.5% and 6.7%, each. Also its Monthly Income Scheme, the rates are at 6.6%, which matures in five years.

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The only two possibilities where interest rates are close to small savings schemes are FDs from PNB housing and Floating Rate Savings Bonds. PNB Housing delivers 6.6-6.7% for deposits between three and 10 years. The interest rates on Floating Rate Savings Bonds is 7.16%.

However, just like Small Savings Schemes, the rates on these bonds could differ every 3 months. The next reset date is on 1 January 2021, and the government is yet to declare the new interest rate on these bonds.


The interest rate on the Senior Citizen Savings Scheme is 7.4​%, which is more beneficial than bank FDs for seniors. Besides this, One more government-backed scheme for seniors is Pradhan Mantri Vaya Vandana Yojana. It’s sold by Life Insurance Corporation of India.

The interest rates differ on the scheme depending on the frequency of payment a retiree prefers. If the senior chooses to receive yearly payments, the rates are up to 7.66%. For half-yearly, quarterly, and monthly payments, they are 7.52%, 7.45%, and 7.4%, each.

Many specialists feel that interest rates will both remain the same or could even fall. If the expansion continues to remain high, their real return could be negative or low. Conservative investors, therefore, need to have a multi-asset strategy unless they are seniors.

They can invest a small share in equities through mutual funds. Even a 10-15% of the portfolio in equities over the long term (over 5-7 years) will help to produce better returns.



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