Home / Money / Personal Finance /  Senior Citizen Savings Scheme: Will govt hike SCSS interest rate above 8%

Senior Citizen Savings Scheme (SCSS) interest rate: Given the next revision of the interest rates of Small Savings Schemes scheduled to take place by the end of the month, senior citizens are hoping that the Government may further increase the the Senior Citizen Savings Scheme (SCSS) interest rate.

In December, the interest rate for the SCSS for the last quarter of the fiscal year 2022–23 was changed. Currently, it offers an interest rate of 8%.

Amit Gupta, MD, SAG Infotech said it is unlikely that the SCSS interest rate would rise further.

Vinit Khandare, CEO & Founder, MyFundBazaar India Private Limited also agreed with Gupta. Further upward revision in the SCSS interest rate is unlikely. While it is expected that the government may increase the interest rate on shorter-duration small savings schemes due to an uptick in G-Sec yield, as the SCSS interest rate was revised very recently, another revision is not expected, he said.

Steep increases in policy rates have been observed over the past few quarters, while the interest rates offered on the Senior Citizens Savings Scheme (SCSS) have also been increasing, albeit at a slower pace. According to Nirav Karkera, Head of Research, Fisdom, the gap between risk-free rates and the rates offered by SCSS has been shrinking.

“In light of the elevated inflation levels, it seems essential to raise the SCSS rates to safeguard the financial interests of senior citizens. The current economic climate presents a strong case for increasing the interest rates on this scheme," added Nirav Karkera.

Meanwhile, the Government is expected to soon notify the new investment limit for the SCSS scheme, announced in Budget 2023, however a formal notification on this announcement is still due. The Finance Minister Nirmala Sitharaman stated in her budget that senior citizens will be allowed to deposit up to 30 lakh in their SCSS accounts.

“By investing 30 lakh in their SCSS accounts, senior citizens can earn up to 20,000 per month in interest income, while senior citizen couples can earn up to 40,000 per month in combined interest income by depositing Rs. 30 lakh in each of their separate SCSS accounts," said Amit Gupta.

The SCSS account lends a helping hand to senior citizens by providing assured rate of interests at 8% maturing in 5 years. It can be extended by the account holder for another period of three years.

Sangeeta Ojha
A business media enthusiast. Writes on personal finance, banking and real estate.
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