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A reason to smile: Interest rates on PPF, NSC raised

By Super

A reason to smile: Interest rates on PPF, NSC raised
Season of rising interest rate has not even spare the government to hook up with its income. Since the Reserve Bank deregulated bank savings rate, number of banks have raised their interest rate on savings deposit between 4% to 6%. With this, the old traditional products offered by the government had started looking sour to the investors.

To bring a smile to millions of small savers, the Union government on Friday has made certain amendments in government schemes in favour of the investors.


Now your postal savings scheme will offer you a return of 4% than previous of 3.5%.

The limit on annual Public Provident Fund (PPF) investments have been raised from Rs 70,000 to Rs 1,00,000 and interest rate on the PPF investments have also been revised from 8% to 8.6%. But, the move also comes with one demerit, now raising loans from your PPF schemes will be costlier as the government has doubled lending rate to 2%.

The Monthly Income Scheme (MIS) will fetch an interest rate of 8.2%.

The interest rate on one-year fixed deposits have been raised from 6.25% to 7.7%.

The government have also decided to discontinue its traditional saving scheme - 'Kisan Vikas Patra'.

The new National Savings Certificate (NSC) would now be available with the ten-year of the maturity with the annual interest rate of 8.7%.

The MIS and NSC with the six-year maturity has been replaced with the five-year maturity.

The new interest rates on small savings schemes are in line with G-sec rates of similar maturity, with a spread of 25 basis points (bps) with two exceptions – the spread on 10-year NSCs would be 50 bps and 100 bps on senior citizens savings schemes.

A monitoring group will also be set up to resolve various operational issues.

Story first published: Monday, November 14, 2011, 11:05 [IST]
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