Senior citizens savings scheme (SCSS) collection spikes while PPF rates remain same

Total collections made under small savings schemes witnessed a jump in September quarter, with deposits for the Senior Citizens Savings Scheme rising nearly 2.5 times year-on-year to ₹74,675 crore, reported Indian Express. 

This led to over 160 per cent spike over ₹28,715 crore collected in the corresponding period a year ago, an official said. Besides this, total collections made under Mahila Samman Savings Certificate, stood at ₹13,512 crore during September quarter.

The interest rate for Senior Citizens Savings Scheme was raised to 8.2 per cent from 8 per cent in June quarter this year and has been kept unchanged since then. 

The investment limit for the scheme for elderly was raised to ₹30 lakh from ₹15 lakh from April this year. 

Rates unchanged

Besides these, other small savings rates remained unchanged for the December quarter, with an increase of 20 basis points in interest rate of one small savings scheme — 5-year recurring deposit.

The interest rate for the Public Provident Fund scheme has remained unchanged at 7.1 per cent, which the official said has been kept in mind factoring in the tax benefits for the scheme.

“There is a conscious thought towards it (keeping PPF rate unchanged). The Shyamala Gopinath Committee in 2016 had given a formula for the small savings schemes rates…what the committee missed out was possibly the tax benefits given to schemes like PPF. Our priority is for schemes for senior citizens and women like Sukanya Samriddhi Account Scheme. PPF still remains the scheme with one of the highest returns. But we have to factor in the costs when we pay interest as there is revenue loss on the receipts side also due to tax benefits,” the official said, reported Indian Express.

There has been no change in the PPF interest rate since April 2020, when it was slashed to 7.1 per cent. 

For April-June 2021, the government had proposed to cut it to 6.4 per cent from 7.1 per cent. The decision was, however, withdrawn a day later.