Rates on small savings schemes increased

Rates on small savings schemes increased

In its bid to render the National Small Savings Fund schemes more attractive to investors by way of returns and halt the tendency to switch over to bank deposit schemes, the government, on Monday, hiked the rates of interest on post office small savings plans by up to 50 basis points for the new fiscal year.

Accordingly, while the interest rate on savings deposits has been kept unchanged at 4 per cent — the same as in savings bank accounts — the rates for time deposits of one and two years stand increased by 50 basis points each to 8.2 per cent and 8.3 per cent, respectively.

For the more popular ‘monthly income scheme', however, the increase is slightly lower at 30 basis points and, thus, the interest rate for the five-year scheme stands pegged at 8.5 per cent while the interest on public provident fund has been upped from 8.6 per cent to 8.8 per cent.

The new rates are to come into effect from April 1 this year and remain valid for the whole of 2012-13.According to an official release here, the interest rate for three-year time deposits has been revised up from 8 per cent to 8.4 per cent while that for the five-year time deposit has been hiked to 8.5 per cent from 8.3 per cent. The five-year recurring deposit scheme will also fetch investors a higher interest of 8.4 per cent as compared to 8 per cent for the current fiscal.

Just as banks pay a higher return to senior citizens, the rate for senior citizens savings scheme has also been raised to 9.3 per cent from 9 per cent at present. Besides, the budget for 2012-13 has proposed a reduction in the age slab for the senior citizen category to 60 from 65.

The interest rate on the five-year and 10-year maturity National Savings Certificate has also been revised higher by 20 basis points each to 8.6 per cent and 8.9 per cent, respectively.