Govt to hike interest on post office savings
The government has decided to increase the interest rates on post office savings deposits to 4 per cent, from the present 3.5 per cent, in a move that will benefit millions of small savers.
“We have taken a decision. We will be issuing a release on that soon,” Economic Affairs Secretary R Gopalan said, when asked whether the government is proposing to raise interest rates on post office savings bank account to 4 per cent.
Small savings schemes run by the post office, a major source of the government’s borrowings, are losing their sheen as the interest rates offered on bank deposits are more attractive. While most banks give 4 per cent interest on savings bank deposits, some lenders following the freeing of this rate by the Reserve Bank of India, give returns of 6 per cent.
The Shymala Gopinath Committee, constituted by the government last year to review the national small savings scheme has suggested linking of interest rates on small savings with that of the market.
Reforms in the small savings schemes are long over due as the government had not acted on the similar suggestions of the Y V Reddy Committee reports submitted in 2001.
Apart from other recommendations, the Gopinath Committee had suggested that the interest rate for the one-year small deposit scheme go up to 6.8 per cent from 6.25 per cent and the introduction of the 10-year National Saving Certificate scheme.
