Since elections are approaching, the government announced to hike the rates on some of the small saving schemes. The revised rates will be effective from next month. No change of rates has been reported in five years National Saving Certificates (NSC) and Public Provident Fund.
The revised rate for the tenure of 1, 2 and 3 year term deposit is 8.4% previously it was 8.2, 8.2 and 8.3% respectively. For the period of 5 years rate has been increased by 0.1%, from 8.3% to 8.4%. It has been reported that even after hike in rates the small savings scheme are still less attractive than banking deposits. Small saving scheme also offer the benefit of tax savings. Interest rates on small savings are aligned with Government securities of similar maturities with a spread of 25 basis points.