Govt Likely To Increase Interest Rates Of Senior Citizen Savings Scheme: Reports

The central government may revise the interest rate on Senior Citizen Savings Scheme (SCSS) as the next revision of interest rates on small savings schemes is due by the end of this month. Senior citizens also expect that the government may announce a hike in the SCSS interest rate along with a revised interest rate for small savings schemes.

SCSS interest rate for the last quarter of FY 2022-23 was announced in December. Currently, SCSS offers an interest rate of 8%. Senior citizens are expecting a hike in the interest rate as it has gone up to 9.3% in the past.

Though the government is yet to make any official announcement in this regard, experts are not optimistic about any change in the SCSS interest rate. According to Amit Gupta, MD, SAG Infotech, further hike in SCSS interest rate is doubtful. Similarly, Vineet Khandare, CEO and Founder of MyFundbazaar India Pvt Ltd said that the SCSS interest rate cannot be further revised.

Given the rise in government bond yields, it is expected that the Center may increase the interest rate on short-term small savings plans.

In view of the high inflation rates, it appears necessary to increase the SCSS rates to protect the financial interests of senior citizens. While an official announcement on the interest rate is yet to be made, the government may soon issue a notification on the enhanced limit under SCSS. In the Union Budget 2023, Finance Minister Nirmala Sitharaman increased the limit under SCSS from Rs 15 lakh to Rs 30 lakh.

Senior citizens can earn interest income of up to Rs 20,000 per month by investing Rs 30 lakh in their SCSS accounts as per the prevailing interest rate. SCSS account offers a guaranteed interest rate of 8% interest to senior citizens. The maturity period of SCSS scheme is 5 years and after maturity the savings can be extended for another three years.

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