Revision of interest rate of National Savings Time Deposit Scheme

In a recent notification from the Ministry of Finance, the Central Government announced significant amendments to the National Savings Time Deposit Scheme of 2019. This modification, termed as the National Savings Time Deposit (Third Amendment) Scheme, 2023, introduces new interest rates for various tenure periods. This amendment is not immediate but retrospective, coming into effect from the 1st of July, 2023.

Decoding the Changes:

1. Modification in Date Ranges: The scheme has adjusted the validity of previous interest rates. Instead of the rates being applicable “on or after the 1st day of April, 2023”, the modified clause states these will be valid “between 1st April, 2023 and 30th June, 2023”, clarifying the specific duration of the older rates.
2. Introduction of New Interest Rates: The most pivotal part of this amendment is the introduction of new interest rates effective from the 1st day of July, 2023. The revised rates are as follows:
   • One-year account: 6.9%
   • Two-years account: 7.0%
   • Three-years account: 7.0%
   • Five-years account: 7.5%

This strategic revision indicates the government’s response to current economic conditions, aiming to attract more deposits by offering competitive rates.

Retrospective Effect:

An essential aspect of this amendment is its retrospective nature, meaning it takes effect from a past date. However, the Ministry ensures that the retrospective application does not adversely affect any depositors.

Historical Context:

The National Savings Time Deposit Scheme is not new. Its principal scheme was first published on the 12th of December, 2019. Since then, it has undergone several modifications, with this being the latest in a series of amendments aiming to make the scheme more attractive and beneficial for its users.

MINISTRY OF FINANCE
(Department of Economic Affairs)
NOTIFICATION
New Delhi, the 23rd August, 2023

G.S.R. 620(E).—In exercise of the powers conferred by section 3A of the Government Savings Promotion Act, 1873 (5 of 1873), the Central Government hereby makes the following Scheme further to amend the National Savings Time Deposit Scheme, 2019, namely:-

1. (1) This Scheme may be called the National Savings Time Deposit (Third Amendment) Scheme, 2023.

(2) It shall be deemed to have come into force on the 1^st day of July, 2023.

2. In the National Savings Time Deposit Scheme, 2019, in paragraph 7,-

(a) in sub-paragraph 1(D), for the words and figures, “on or after the 1^st day of April, 2023”, the words, figures and brackets “between 1^st April, 2023 and 30^th June, 2023 (both days inclusive)” shall be substituted;

(b) after sub-paragraph 1(D), the following sub-paragraph and Table shall be inserted, namely:-

“1(E) The rate of interest as specified in the Table below shall be applicable to the deposit made on or after 1^st day of July, 2023 under the Scheme.

TABLE

[F. No. 1/04/2016-NS]

ASHISH VACHHANI, Addl. Secy.

Explanatory Memorandum.- By giving retrospective effect to the National Savings Time Deposit (Third Amendment) Scheme, 2023 no one shall be adversely affected as a result of retrospective effect being given to this amendment.

Note: The principal Scheme was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 922(E), dated the 12^th December, 2019 and subsequently amended vide number G.S.R. 289(E), dated the 5^th May, 2020, G.S.R. 838(E), dated the 22^nd November, 2022, G.S.R. 53(E), dated the 20^th January, 2023 and G.S.R. 327(E), dated the 27^th April, 2023.