Interest Rate For 5-Year Recurring Deposit Scheme Hiked To 6.7%

The government on Friday increased the interest rate on five-year recurring deposit scheme by 20 basis points for the October-December quarter. The interest has been hiked from 6.5% to 6.7%. All other small savings instruments will offer the same interest rates.

The revised rates were notified by the Department of Economic Affairs of the Ministry of Finance on September 29. “The rates of interest on various Small Savings Schemes for the third quarter of financial year 2023-24 starting from 1st October, 2023 and ending on 31st December, 2023 have been revised,” the office memorandum read.

According to the notification, only the interest rate for the five-year recurring deposit scheme has been increased. The Savings Scheme will continue to have 4% interest rate while the one, two, and three-year recurring deposit schemes will continue to offer 6.9%, 7%, and 7% interest rate.

There is an interest rate of 8.2% on the the Senior Citizen Savings Scheme and 7.4% on the Monthly Income Account Scheme. Other schemes with unchanged interest rates include the National Savings Certificate, Public Provident Fund Scheme, Kisan Vikas Patra, and Sukanya Samriddhi Account Scheme.

On Thursday, the bond yields of the government increased with the benchmark yield posting its biggest in single-session rise this year. The 10-year benchmark 7.18% ended at 7.2414% after ending at 7.1704% in the previous session. The biggest single-session rise has been recorded since November last year, reported Reuters.

The interest rates on small savings schemes are decided by the government and depend upon the market yields of government securities.