What is Core & Satellite strategy?

There is good news for those investing in small savings schemes. The government has changed the interest rates for the second quarter of the financial year 2023-24 i.e. July to September. Interest rates on many small savings schemes have been increased by 10 to 30 basis points. One hundred basis points is equal to one percent. The increased interest rates will be applicable from July 1. But investors hoping to get more interest in PPF are again disappointed.

Increased interest in these schemes
The schemes in which the interest rates have been increased include one-year and two-year time peposit (TD) and five-year recurring deposit (RD) schemes. The post office TD scheme works like a fixed deposit (FD) of banks. According to the notification issued by the Ministry of Finance on Friday, the one-year fixed deposit has been increased from 6.8 percent to 6.9 percent. Apart from this, the interest rate on two-year TD has been increased from 6.9 percent to 7.0 percent. The interest on five-year RD has been increased from 6.2 percent to 6.5 percent. In this way, the maximum increase has been made in the interest of RD.

No hike in these schemes
There has been no change in the interest rates of Senior Citizen Savings Scheme (SCSS), PPF, Kisan Vikas Patra (KVP) and Sukanya Samriddhi Yojana for the second quarter of this financial year, July to September. Apart from this, the interest rates on fixed deposits of three years and five years have also not changed.

PPF interest static for 3 yrs
Public Provident Fund (PPF) is the most popular small savings scheme. There has been no change in its interest rates since April 2020. At present, 7.1 percent interest is being received in this scheme. However, in the past, the government has increased the interest rates of all small savings schemes like Senior Citizen Savings Scheme (SCSS), National Savings Certificate (NSC) and Sukanya Samriddhi Yojana (Sukanya scheme). In such a situation, investors were hopeful that this time the interest rates of PPF could be increased.

How are PPF interest rates calculated?
To decide the interest rates of PPF, interest is given 25 basis points more than the 10-year bond yield. Right now this bond yield is 7.3 percent. This way, the interest rates of PPF could have been increased up to 7.35 percent, but the government has not made any change in it once again. Since May 2022, RBI has increased the repo rate by 2.5 percent. During this, all the banks have increased their FD rates several times but the interest rate of PPF has remained stable for the last three years.