Post office savings deposit rate to go up

Business

oi-Monika

By Monika Nihalani

Published: Thursday, November 10, 2011, 10:58 [IST]

With the number of banking players raising their savings deposit rates, old traditional products offered by the government have started looking unattractive these days. To make them attractive, the government has decided to increase post office savings deposit rate to 4% from an existing of 3.5%.

Right after the Reserve Bank of India (RBI) deregulated interest rates on bank savings accounts, most of the banks have started offering 5 – 6% interest rates on their bank savings accounts, which is attracting large number of small savers.

The suggestion to raise interest rates on post office savings scheme has been presented long back by a government committe, which may get a final nod now.

“We have taken a decision. We will be issuing a release on that soon,” Economic Affairs Secretary R Gopalan told PTI.

Shyamala Gopinath Committee of the government had suggested to link the interest rates on small savings with that of the market.

They also had suggested that interest rate for one-year small deposit scheme should go up to 6.8% from 6.25%.

Small saving deposit schemes are the major source for the government to finance its fiscal deficit, so the government was bound to raise the interest rates on these schemes to retain their customers.

GoodReturns.in
(With inputs from PTI)