You will get better interest than the bank. There is no possibility of major reduction in the interest rates of Post Office, PPF and Sukanya Scheme.

Despite the total reduction in repo rate by 1.25 percent by the Reserve Bank of India (RBI), there is relief news for common investors and savers. At present, there is little possibility of any major reduction in the interest rates available on small savings schemes of post offices and banks. The government will announce new rates for the January-March quarter by December 31, and given the current economic scenario, experts believe that interest rates will either remain stable or may see very minor changes.

Despite the huge reduction in repo rate by 1.25 percent, there will be no much impact on investors’ earnings and deposits.

With the aim of stimulating the economy and making loans cheaper, the Reserve Bank of India has reduced the repo rate by 1.25 percentage points to 5.25% in the last one year. Generally when the repo rate falls, the interest rates on deposit schemes also fall. However, economic analysts say that if the interest rates on small savings schemes are reduced too sharply, this option of safe investment available to the middle class will be weakened. Besides, the competition of these schemes with bank deposits will also be affected. This is why the government adjusts rates very slowly to protect the common investor from market shocks.

This much return is currently being received in major schemes like Sukanya Samriddhi and Senior Citizen Saving Scheme.

According to the information given in the clip, at present the rates of 12 major small savings schemes remain quite attractive for investors. Senior Citizen Savings Scheme (SCSS) and the popular Sukanya Samriddhi Yojana for daughters are getting interest of around 8.2%. At the same time, about 7.7% returns are being given on Post Office Monthly Income Scheme (MIS) and National Savings Certificate (NSC). The rate of 7.1% is applicable on Public Provident Fund (PPF) and 7.7% on Kisan Vikas Patra (KVP). Apart from this, investors are also getting the benefit of interest between 6.9% to 7.5% on term deposits or fixed deposits of one to five years.

The government gets great help in managing infrastructure and budget deficit through domestic savings fund.

For the Central Government, these small savings schemes are not only a medium of investment but also an important source of raising funds. The government collects lakhs of crores of domestic savings funds annually through these schemes, which are used to control the budget deficit and spend on the country’s infrastructure. The Finance Ministry understands very well that if interest rates are cut drastically, the flow of investment in these schemes may reduce. Therefore, the government always tries to strike a practical balance between interest-rate cuts and investor confidence.

Present time is better for those seeking safe investment and fixed returns for January to March quarter.

Current market signals indicate that in the January-March quarter, the rates of schemes like PPF, NSC, Sukanya and KVP will either remain the same or there may be a slight decline of maximum 0.1 to 0.2%. The chances of a major cut are very weak at the moment. In such a situation, small investors who want safe and fixed returns can feel free to continue investing in these schemes at the current rates. Future changes in rates will depend entirely on economic conditions and bond-yield fluctuations.