Small Savings Schemes: Union Government Maintains Small Savings Interest Rates Unchanged for April-June Quarter

Small Savings Schemes: In a significant move, the Union government has decided to keep the interest rates on small savings schemes unchanged for the April-June quarter of 2024. This decision marks the first time in seven quarters that rates on these schemes have not been increased, following a series of rate hikes initiated by the finance ministry starting from October-December 2022.

Union Government Maintains Small Savings Interest Rates Unchanged for April-June Quarter

The announcement was made through a government notification, affirming that the interest rates on various Small Savings Schemes for the upcoming quarter will remain the same as those notified for the fourth quarter of the previous fiscal year (January 1, 2024, to March 31, 2024).

The adjustment in these rates is expected to reflect changes in government bond yields

Typically, small savings interest rates are linked to market yields on government securities, with a spread of 0-100 basis points over the yield of comparable securities. The adjustment in these rates is expected to reflect changes in government bond yields. However, despite a decline in government bond yields during the reference period of December 2023 to February 2024, rates on small savings schemes have been left unchanged for the second quarter of 2024.

During the said reference period, yields on five- and 10-year government bonds witnessed a decrease of approximately 20 basis points, while the yield on the government's 364-day Treasury bill experienced a marginal decline of 3 basis points.

The decision to maintain the current interest rates on small savings schemes comes amidst evolving market dynamics and aims to provide stability to investors and savers.

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