A day ahead of the announcement of Lok Sabha poll dates, the government on Tuesday increased interest rates on a range of popular post-office saving schemes in an apparent move to make small savings more rewarding for millions.
The rate of return on fixed deposits for one and two years has been increased to 8.4% from the present 8.2%.
Similarly, fixed deposits of three and five years have been raised by 0.1 percentage point to 8.4% and 8.5%, respectively. The interest rate on five-year recurring deposits has also been raised to 8.4%, up from 8.3%.
The new rates will be effective from April 1, 2014.
Post office savings accounts (POSA) will continue to fetch 4% interest per annum and the annual investment ceiling in PPF savings and interest rate has been kept unchanged at Rs 1 lakh and 8.7% respectively.
The interest rate on National Savings Scheme (NSC) with 5 and 10 year maturities also remain unchanged at 8.5% and 8.8%, respectively. The rates on five-year Monthly Income Scheme (MIS), the popular PPF (public provident fund) have, however, been kept unchanged at 8.5% and 8.7% respectively and the senior citizen savings schemes of a five-year tenure has been kept unchanged at 9.2%.