New Delhi/Chennai: Interest on short-term post office saving deposits was on Tuesday cut by 0.25 per cent while the rate on employees' provident fund was increased marginally to 8.8 per cent.
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.
In Chennai, Labour Minister Bandaru Dattatreya announced an interim hike in interest rate on employees' provident fund (PF) to 8.8 per cent for 2015-16 fiscal from 8.75 per cent previously. The increased in interest rate on PF, announced after 211th meeting of the Central Board of Trustees (CBT) of the Employees' Provident Fund Organisation (EPFO), was lower than the employees union demand for 8.9 per cent.
With a view to align small saving interest rates with broadbased banking rates, 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year term deposits, KVP as well as 5-year Recurring Deposits earned over similar tenure, Government securities will be withdrawn from April 1.
While the short deposits currently fetch 8.4 per cent 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.
Sukanya Samriddhi Yojana, Senior Citizen Savings Scheme and the MIS, which currently command 0.75, 1 and 0.25 per cent higher interest rate than G-sec, were not untouched as they are linked to social security goals.
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 per cent interest rate while girl child scheme Sukanya Samriddhi Yojana commands 9.2
per cent. MIS gets 8.4 per cent interest rate.
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