In a span of less than six months; this is the second time that interest rates on small savings have seen an increase. The government has increased rates on small savings by up to 50 basis points that comes into effect from the next new financial year. However, the interest rate on post office savings has been unchanged at 4 per cent. The rates on one- and two-year term deposits have gone up by 50 basis points to 8.2 per cent and 8.3 per cent, respectively.
The new rates are to come into effect from April 1, 2012 and will remain valid for 2012-13. The monthly income scheme will see a 30 basis point increase, while senior citizens have something to smile with the rate for senior citizens savings scheme been raised to 9.3 per cent from the current 9 per cent. The new 5- and 10-year NSC along with the PPF will also go up by 20 basis point.
For investors, this marks a change in the way they invest in small savings schemes that earlier had long stretches of unchanged interest rates. Although the rates have gone up this time, investors should be aware that this is not a norm, especially since the rates are now linked to the G-sec rates, which will be revised annually.
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