NSC, PPF Accounts Will Fetch 8% As Govt Hikes Small Savings Rates

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(LiveMint)

Interest rates on various small savings schemes, including Public Provident Fund (PPF), Kisan Vikas Patra (KVP), National Savings Certificate, Monthly Income Scheme, Senior Citizen Savings Scheme (SCSS) and Sukanya Samriddhi Scheme (SSS), were increased by 40 basis points (bps) for the October-December quarter.

While the interest rate for post office savings deposits remain at 4%, PO time deposits for 1, 2 and 3 years will give additional returns of 30 basis points. Five-year deposits and recurring deposits will fetch 40 basis points additional return in the next quarter. One basis point is one-hundredth of a percentage point.

The hike in interest rates on small savings schemes comes after a downward trend of about six years. Interest rates for PPF was last increased in 2012-13 from 8.6% in the previous fiscal to 8.8%. Since then, interest rates had either been reduced or remained unchanged. During the January-March 2018 quarter, interest rates on PPF had touched an all-time low of 7.6%.

Interest rates of all small saving schemes are linked to government bond yields and are recalibrated on a quarterly basis. Given that bond yields crossed the 8% mark recently, there were expectations of an increase in rates of such schemes.

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