Interest rates on post office savings schemes go up
In a bid to lure millions of small savers across the country who had exited the National Small Savings (NSS) schemes in pursuit of higher returns, the Union Government on Friday raised the interest rates on Post Office Savings Account (POSA), Time Deposit Schemes of various tenures, Monthly Income Scheme (MIS) and Public Provident Fund (PPF).
To be notified soon
According to a Union Finance Ministry statement, the interest rate on POSA stands increased to 4 per cent from 3.5 per cent for the current fiscal while deposits in schemes such as MIS and PPF will fetch attractive returns of 8.2 per cent and 8.6 per cent respectively, as compared to the existing rates of 8 per cent.While all time maturities will fetch significantly better returns by way of higher interest rates than hitherto, the biggest gainer is set to be the one-year fixed deposit scheme with its interest rate pegged at 7.7 per cent as compared to the prevailing 6.25 per cent.
As per the decision approved by Finance Minister Pranab Mukherjee, the new rates are to be made applicable from the date of notification to be announced soon.
The move to make the small savings schemes more attractive and align them with current market rates is in line with the recommendations of the Shyamala Gopinath Committee which was set up to look into the matter at the advice of the 13th Finance Commission.
Alongside, however, the Government has decided to discontinue the Kisan Vikas Patra (KVP) scheme.
New NSC instrument
It has also reduced the maturity period for the MIS and National Savings Certificate (NSC) schemes to five years from the existing six years and has introduced a new 10-year NSC instrument with its interest rate pegged at 8.7%.
Another bonanza for small savers is that the annual investment ceiling in PPF savings accounts has been raised to Rs. 1 lakh from the current limit of Rs. 70,000.
At the same time, what may irk investors is that loans against such savings would be at a higher interest rate of 2 per cent as against 1 per cent at present. The Government has also scrapped the 5 per cent bonus on maturity of MIS schemes and abolished the commission for agents on PPF and Senior Citizens Savings Schemes.
· Interest rate on Post Office Saving Account up to 4% from 3.5%
· Rate on MIS and PPF raised to 8.2% and 8.6% respectively
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S.S.Mahadevaiah
General Secretary
All India Postal Extra Departmental Employees Union
