With government bond yields on the rise, there is a possibility of a hike in the interest rates of savings schemes and investments. The interest rates for Provident Fund Account (PPF), Senior Citizen Savings Scheme (SCSS), Sukanya Samriddhi Accounts (SCA), National Savings Certificates (NSC), etc., are set for review by the end of this month, according to multiple media reports.
The benchmark 10-year bond yield has seen an increase of an average of 7.31% in the quarter of June to August. This has further raised expectations for the upcoming quarter results, which are to be declared by the end of September.
The interest rates of small savings schemes are linked to the market yields of government bonds. The Finance Department reviews the interest rates of small savings schemes every quarter based on the G-Sec gains. The change in rates is based on formulae recommended by Shyamala Gopinath Committee in 2011. As per the formula, an increase of 100 basis points of G-Sec yields equals a 1% interest rate hike in small savings schemes.
As per the formula followed by the Ministry of Finance, the PPF interest rate could go up to 7.56% in the upcoming quarter. Similarly, the interest rate for Sukanya Samriddhi Yojana could also increase to 8.3% from its current rate of 7.6%.
However, the government might also decide not to go ahead with an increase in rates. There have been instances when the interest rates were revised downwards, for example, in the April-June Quarter of 2020. Hence, the final verdict can only prevail if the predictions will stand valid.
Most Indians prefer investing in Government schemes as there are considered to be less risky than other investment avenues. If the interest rate hike happens, it could help millions of Indians to earn more on their investments.
So, what is your preferred investment avenue? Government schemes, mutual funds, stocks, or crypto? Let us know in the comment section. Also, don’t forget to follow #TrendingNow – personal finance tidbits curated by the experts.
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
List of Holidays in October 2023
As soon as the monsoon departs and the sky clears, the weather becomes ideal for planning a getaway... Read More »What is Paper Trading – How to Start and Apps in India
Paper trading is a method of practising trading and testing investment strategies in a simulated vi... Read More »What is V Shaped Recovery – Its Features and How is it Different From Others
It’s a term that’s used to describe a decline in the economy followed by a period of star... Read More »What is Valuation of Shares – Its Methods And How Does It Help Investors
Before investing, investors try to gauge the true value of a company's shares. This process of dete... Read More »What is Risk Premium and How it Affects Returns?
Risk premium is the minimum incentive people are willing to accept as compensation for investing in... Read More »#TrendingNow: India Becomes Russia’s 2nd Biggest Oil Buyer; Middle East Imports Lowest in 19 Months
India's oil imports from the Middle East fell to a 19-month low in September while Russian imports ... Read More »#TrendingNow: Investors Punish Zuckerberg over Costly Metaverse; Stock Down 20%
Investors rushed to dump Meta Platforms Inc's stock in after-hours trading, pushing it down 20% and... Read More »#TrendingNow: Dove, TRESemme Dry Shampoos Recalled Over Cancer Risk
Unilever PLC has recalled aerosol dry shampoos, including brands such as Dove, Nexxus, TRESemme, Su... Read More »#TrendingNow: India Sees Strong Gold, Jewellery Sales on Dhanteras
Dhanteras saw strong sales of gold, jewellery, and coins this year, The Economic Times quoted data ... Read More »What is UPI Lite and How to Set it Up on the BHIM App?
Reserve Bank of India Governor Shaktikanta Das launched three key initiatives at the Global Fintech... Read More »#TrendingNow: India Lost a Whopping $159 Billion Due to Extreme Heat in 2021, Says Report
India suffered an income loss of a whopping $159 billion or 5.4% of its gross domestic product (GDP... Read More »#TrendingNow: Arunachal’s Hollongi Airport Almost Ready, IndiGo’s Direct Delhi Flight a Possibility
Arunachal Pradesh’s Hollongi Airport is almost ready for commercial flights with leading airline ... Read More »Top 10 Chit Fund Schemes in India in 2023
Chit funds are one of the most popular return-generating saving schemes in India. It is a financial... Read More »10 Best Gold ETFs to Invest in India in February 2023
Gold ETFs or Gold Exchange Traded Funds are passively managed funds that track the price of physica... Read More »Top 10 Demat Accounts in India [Lowest Brokerage Charges]
A Demat account was created to eliminate the time-consuming and inconvenient procedure of purchasin... Read More »20 Best Index Funds in India to Invest in 2023 (Updated on 31st Jan)
What is an Index Fund? An index fund is a type of mutual fund or exchange-traded fund (ETF) that... Read More »Best Arbitrage Mutual Funds to Invest in India: Returns and Taxation
Arbitrage funds are hybrid mutual fund schemes that aim to make low-risk profits by buying and sell... Read More »Best SIP Mutual Funds To Invest In India (2023) – Its Types And Taxation
A Systematic Investment Plan (SIP) is a convenient way to invest a fixed sum in mutual funds. For i... Read More »10 Best Corporate Bond Funds in India 2023 – With Returns
Corporate bond funds are debt funds that invest at least 80% of the investment corpus in companies ... Read More »10 Best Banks for Savings Account in India (2023)
A savings account keeps your money safe, and lets you earn interest every quarter. There are many b... Read More »All information is subject to specific conditions | © 2023 Navi Technologies Ltd. All rights are reserved.
Start Small. Dream Big.
Start your Investment Journey with just ₹10