Govt leaves interest rates on small savings schemes unchanged for July-Sep

The finance ministry started raising small savings interest rates in October-December 2022 after leaving them unchanged for nine consecutive quarters.

The Union government on June 28 left interest rates on small savings schemes unchanged for the second quarter of FY25 starting July 1, 2024, making it the second time in seven quarters that rates on these instruments have not been increased.

The finance ministry started raising small savings interest rates in October-December 2022 after leaving them unchanged for nine consecutive quarters.

"The rates of interest on various Small Savings Schemes for the second quarter of FY 2024-25 starting from 1st July, 2024 and ending on 30th September, 2024 shall remain unchanged from those notified for the first quarter (1st April, 2024 to 30th June, 2024) of FY 2024-25. This has the approval of the competent authority," a government notification said.

Small savings interest rates, while set by the government, are linked to market yields on government securities at a spread of 0-100 basis points over the yield of these securities of comparable maturities. As such, when market yields on government securities fall, interest rates on small savings schemes should also be decreased.

However, the small savings interest rates have been left unchanged for the second quarter of FY25 despite a fall in government bond yields.