W.E.F. 1.12.2011, the interest rates in respect of small savings schemes – Indian post offices have been revised.

Existing   Proposed

3.50%      4.00% Savings deposit

6.25%       7.7% One year Fixed deposit(FDR)

6.50%       7.8% Two year FDR

7.25%      8.00% Three year FDR

7.50%      8.30% Five year FDR

7.50%     8.00% Five Year RD

9.00%       9.00% Senior citizens savings scheme

8.00%      8.20% Monthly income scheme of 5 year duration(Bonus5% scrapped and one year reduced from previous duration of 6 years)

8.00%       8.40% National Savings certificate of 5 year duration(NSE)( one year reduced from previous tenor of 6 years)

Nil             8.70% National Savings certificate of 10 year duration(new one)

8.00%      8.60% Public Provident Fund(PPF)

Kisan Vikas Patras will be discontinued.

Investment ceilings for PPF is increased from Rs.70,000 to 1,00,000.

Early withdrawal of post office fixed deposits allowed now.

Abolished the commission for agents on PPF and Senior Citizens Savings Schemes.

Disadvantage:

Though generally, the above is good for investing public in respect of safety, liquidity and returns, there are concerns for senior citizens in respect of Monthly income schemes where bonus of 5% is removed though there is marginal increase of interest rate from 8% to 8.2%. This entails a loss of 0.6% for senior citizens as they lose interest which is supposed to be 8.80% including bonus. Govt should consider increasing the rate to 9% in MIS thus removing this disadvantage especially when India is growing with % of old citizens.

C.R. Venkataramani

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