Interest on short-term post office saving deposits was cut by 0.25 percent while the rate on employees’ provident fund was increased marginally to 8.8 percent.
- The finance ministry has cut interest rate on post office savings of 1, 2 and 3 year terms, Kisan Vikas Patra (KVP) as well as 5-year Recurring Deposits, but left long-term instruments such as monthly investment scheme (MIS), PPF senior citizen and girl child plans untouched.
Key facts:
- The finance ministry said the 0.25 per cent higher interest rate that post office savings of 1, 2 and 3 year term deposits, KVP as well as 5-year Recurring Deposits earned over similar tenure Government securities will be withdrawn from 1 April.
- The short deposits currently fetch 8.4 percent interest, KVP doubles the investment in 8 years and four months (100 months).
- The ministry also announced that henceforth the rates on small savings schemes would be revised every quarter.But they are unchanged.
- Sukanya Samriddhi Yojana-0.75%, Senior Citizen Savings Scheme-1% and the MIS-0.5% higher interest rate than G-secs.
- Similarly, there will be no change in interest rate on long-term instruments like 5-year term deposit and similar tenure National Saving Certificates as well as Public Provident Fund (PPF).
- Currently, PPF deposits get 8.7 percent interest rate while girl child scheme Sukanya Samriddhi Yojana commands 9.2 percent. MIS gets 8.4 percent interest rate.
These schemes also act as instruments of financial inclusion especially in the geographically inaccessible areas due to their implementation primarily through the post offices.
Sukanya Samriddhi Yojana :
- Sukanya Samriddhi Account was launched by Prime Minister Narendra Modi on 22 January 2015 as a part of the Beti Bachao, Beti Padhao campaign in Panipat, Haryana.The account can be opened anytime between the birth of a girl child and the time she attains 10 years age by the guardian.
- A minimum of Rs.1,000 must be deposited in the account annually. The maximum deposit limit is Rs.1,50,000
Senior Citizen Savings Scheme :
An individual of the age of 55 years or more but less than 60 years who has retired on superannuation or under VRS can open account subject to the condition that the account is opened within one month of receipt of retirement benefits and amount should not exceed the amount of retirement benefits. Maturity period is 5 years.
MIS :
Monthly Income Scheme provides an interest rate of 8.2% per annum which is paid monthly.
- Min Amount-Rs. 1,500
- Max Amount-Rs. 4,50,000(if Single) or Rs. 9,00,000(if held Jointly).