Government increases interest rates for NSP and SCSS starting January 1st

The Indian government has announced an increase in interest rates for various small deposit instruments, including post office term deposits, National Savings Certificates (NSCs), and the Senior Citizen Savings Scheme (SCSS). The rate hike, ranging from 20 to 110 basis points, will take effect on January 1, 2021.

This marks the second consecutive quarterly increase and brings the range of interest rates to 4.0% to 7.6%. However, the interest rates for the Public Provident Fund and the Sukanya Samriddhi girl child savings scheme will remain unchanged. The NSC will now offer a 7% interest rate, up from 6.8%, while the SCSS will offer 8% interest, up from 7.6%. The monthly income scheme will also see an increase, offering 7.1% interest compared to the current rate of 6.7%. Post office term deposit schemes with durations of one to five years will also see an increase of up to 1.1 percentage points.

The central bank has encouraged the government to adhere to a formula-based approach for setting small savings interest rates.