Govt hikes interest rates of post office savings schemes

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IANS | 30 Dec, 2022
In good news for senior citizens and common investors, the government on Friday hiked interest rates on post office savings schemes, national saving certificate (NSC), senior citizen savings scheme, and the Kisan Vikas Patra (KVP).

Rates for deposits up to 5 per cent as well as NSC, senior citizen savings scheme and KVP have been hiked by up to 1.1 percentage points, according to a Finance Ministry notification.

The changed interest rates would be applicable between January 1, 2023 and March 31, 2023.

However, interest rates for more popular savings instruments like PPF and Sukanya Samriddhi Yojana have been kept unchanged at 7.1 per cent and 7.6 per cent, respectively.

This is the second straight quarter, when interest rates have been hiked for select schemes. Prior to October 1, 2022, there was no change in interest rates for these schemes for nine consecutive quarters.

Normally, interest rates for small saving schemes are revised every quarter.

With the latest revision, a one-year term deposit with post offices would earn 6.6 per cent interest, for two years deposit, it will earn 6.8 per cent interest, for three years deposit, it will earn 6.9 per cent interest, while for a five years deposit the interest earned would be 7 per cent, the notification said.

Senior Citizen Savings scheme will earn 40 basis points more at 8 per cent during the January-March period, it added.

For KVP, the government has hiked the interest rates to 7.2 per cent, though on a reduced maturity period of 120 months. Currently, KVP has an interest rate of 7 per cent on a maturity period of 123 months.

Monthly Income Scheme would earn 40 basis points more at 7.1 per cent, while NSC interest rate has been raised by 20 basis points to 7 per cent.

Savings deposits will continue to earn 4 per cent per annum interest rate.

The Reserve Bank of India since May this year has raised repo rate five times, thus allowing banks to raise interest rates on deposits.