NEW DELHI: In a move that could provide some relief to the middle and lower middle classes in the country, the Central government on Thursday marginally increased interest rates on small savings schemes for the October-December quarter of the current financial year.
The interest rate hike is also expected to put banks under pressure to increase savings account deposit rates.
According to a Finance Ministry statement announcing the new small savings interest rates, a Public Provident Fund (PPF) will now fetch 8 per cent interest rate for the December quarter, up from 7.6 per cent in the current quarter.
Similarly, the Sukanya Samriddhi Account scheme will now fetch 8.5 per cent interest, compared to 8.1 per cent earlier.
The interest rate on five-year Senior Citizen Savings Scheme has been hiked to 8.7 per cent from 8.3 per cent.
Similarly, the interest rate on post office Monthly Income Scheme (MIS) has been hiked to 7.7 per cent from 7.3 per cent.
As per the fresh circular, Kisan Vikas Patra (KVP) will have an interest rate of 7.7 per cent, up from 7.3 per cent earlier, thus reducing the maturity period of KVP from 118 months to 112 months.The National Savings Certificate (NSC) will now fetch 8 per cent at the same rate as that of PPF, up from the current 7.6 per cent.
The interest on five-year post office recurring deposit scheme and term deposit has also been hiked to 7.3 per cent and 7.8 per cent respectively. In all the other post office schemes, the interest rate has been hiked by 30 basis points.
However, the post office savings deposit interest rate has been kept unchanged at 4 per cent.
The interest rate on small savings schemes are revised on a quarterly basis.
The hike, following two consecutive interest rate hikes by the Reserve Bank of India, is also a signal for the banks to raise savings deposit rates.