Government of India on 4 March 2014 hiked the interest rates on fixed deposit scheme that is offered by post offices by up to 0.2 percent. The new interest rates on the small savings schemes will come into effect from 1 April 2014.
As per the revision of the interest rates the rates apply to post office saving schemes
• Return on 1 to 2 years deposit – hiked by 20 basis points from 8.2 percent to 8.4 percent
• Return on 3-year maturities – hiked from 8.3 percent to 8.4 percent
• Return on for 5-year deposits - it has been raised to 8.5 percent
In case of National Savings Certificates (NSCs), Monthly Income Schemes (MIS) and Public Provident Fund (PPF) the rates have been left unchanged.
• The PPF has been kept unchanged at 8.7 percent and the annual investment ceiling in PPF savings at 1 lakh rupees
• For NSCs rate for maturities of 5 and 10 year remained unchanged at 8.5 percent and 8.8 percent respectively
• The rate on five-year MIS also kept unchanged at 8.4 percent and rates of savings deposit also remained unchanged at 4 percent
These hikes in the rates are as per an earlier policy decision in line with the recommendations of Shyamala Gopinath Committee to align small savings rates with the yield on Government securities.
Benefit of Small Saving Schemes that are operated by post offices across the country
• It provides safe attractive investment options to public and mobilizes resources for development.
Changes based on the committee’s Recommendations
• The government based on the recommendation of the committee also decided to align rate of interest on small savings schemes with G-Sec rates of similar maturity, with a spread of 25 basis points with two exceptions
• The interest rate will be revised every financial year and notified before 1 April
• The interest rate of General Provident Fund (GPF) that is applicable for government employees has been retained at 8.7 percent for 2014-15
• Employees Provident Fund Organization will pay interest rate of 8.75 percent on Provident Fund deposits for 2013-14