After a gap of more than two years, the government on Thursday marginally increased the interest rates on some small savings schemes by up to 30 basis points (bps) in line with the hardening interest rates in the economy.

The interest rate for senior citizens savings scheme has been hiked to 7.6 per cent from 7.4 per cent, for Kisan Vikas Patra to 7 per cent from 6.9 per cent and will mature in 123 months – a month sooner than under the present scheme.

The interest rate for monthly income scheme has also been hiked to 6.7 per cent from the current 6.6 per cent.

With the revision, a three-year time deposit with post offices would earn 5.8 per cent compared with the existing 5.5 per cent, an increase of 30 basis points for the third quarter of the current financial year. The rate on two-year deposit has been increased to 5.7 per cent from 5.5 per cent.

Though the rates have been increased marginally, they are higher compared with the SBI term deposit rates. The state owned bank gives 5.50 per cent for two-year deposit and 5.60 per cent for three-year deposit.

Senior Citizen Savings scheme will earn 20 basis points more at 7.6 per cent against the existing rate of 7.4 per cent during the October-December period, a finance ministry notification said.

There is no change in interest rates of seven other designated small savings schemes: including the Public Provident Fund (PPF) at 7.1 per cent, Sukanya Samriddhi Account Scheme at 7.6 per cent, National Savings Certificate (6.8 per cent) as well as five-year recurring and time deposits (5.8 per cent and 6.7 per cent, respectively). Returns on savings deposits and one-year time deposits are also kept static at 4 per cent and 5.5 per cent.

The last time small savings rates were hiked was for the January to March quarter of 2019, just ahead of the last Lok Sabha elections.

The rates have been kept unchanged for nine successive quarters since the April to June quarter of 2020 when they were slashed across schemes.

Small savings rates are linked to treasury and bond yields. The Shyamala Gopinath committee had recommended the rates on 1-year time deposit may be benchmarked to 364 day T-Bills and 5-year TD to 5-year G-Sec.

Economists said they were expecting a higher increase in rates as the G-sec rates have hardened. The benchmark 10-year yield has been above 7 per cent since April 2022, a strong case for an increase in the rates.

PPF rate same

■ Senior citizen saving scheme rate up to 7.6%

■ Monthly income scheme rate rises to 6.7%

■ 3-year TD rates at post offices higher at 5.8%

■ 2-year TD rate 5.7%

■ Kisan Vikas rate up to 7% for 123 month maturity

■ Rates on PPF, NSC and Sukanya Samriddhi unchanged