Big news for investors. If you’re thinking about the future of your family and kids by investing in PPF and Sukanya Samriddhi Yojana (SSY), then you’ll want to hear this. The Reserve Bank of India (RBI) just cut the repo rate for the first time in five years. This could mean that the government might lower the interest rates on small savings schemes like PPF and SSY in the upcoming financial year. They usually review these rates every quarter.
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The next review is set for March 31, which will cover the April-June quarter. So, the RBI’s recent move could impact the interest you earn from these savings plans. However, the Finance Ministry might hold off on any quick cuts since the effects of the new rates will take some time to show.
Also, it’s pretty typical for banks to ramp up their deposit collections in the last quarter of the financial year. A government source mentioned that now is a great time to put your money into savings schemes.
Interest rates on small savings schemes could drop
Experts believe that the Finance Ministry might lower the interest rates on small savings schemes at some point next year. Still, they think that options like PPF will continue to be appealing because of the tax benefits and compounding advantages. For the next financial year, the central government is aiming to gather around Rs 3.4 lakh crore from small savings schemes, compared to this year’s revised estimate of Rs 4.1 lakh crore.
The PPF offers a 7.1% interest rate, while the Sukanya Samriddhi Yojana gives you 8.2%.
On top of that, the government is planning to allocate 20,000 crores for the Mahila Samman Yojana, which wraps up in March. Right now, PPF investors are enjoying a 7.1% return, and those in the Sukanya Samriddhi Yojana are getting 8.2% annually.
There’s a chance the government might lower these rates in the near future, so it could be a smart move for investors to put their money in now. Plus, these schemes come with the added perk of tax exemption under Section 80C.