THIRUVANANTHAPURAM: The Treasury Department will raise the interest rate of fixed deposits to mobilise money for government’s development programmes. The new rates are 8.50% and 8% for senior citizens and general category respectively for deposits of one year and above. This will come into effect from July 1. The previous rates were 8% and 7.50% respectively.
There is no change in interest rates for deposits of 180 days and above but below one year - 7% and 6.50% respectively. According to the Finance Department, the rate increase was due to the drop in deposits after a rate cut in January this year. “We have now reinstated rates that existed prior to January 2019. A considerable drop in deposits forced us to reconsider the decision,” said an officer.
“During the period several prospective depositors opted for cooperative societies owing to the higher interest rates,” he said. Treasuries Director A Jaffar who confirmed the drop could not reveal the exact amount.
A number of FD holders in the treasury are well-paid pensioners and government employees who would make multiple deposits within a single year. As per the data obtained in August, the department had about `5.86 lakh fixed deposit accounts and a total deposit of `14,000 crore.