Centre raises rates on some small saving plans

NEW DELHI: Amid rising inflation and higher fixed deposit rates, the Treasury Department on Thursday announced up to 30 basis points increase in interest rates on several small savings products in the quarter. followed, marking the first increase in nine quarters. Although the rate of public savings, the most popular small savings scheme, remained unchanged, Kisan Vikas Patras and the 2 and 3 year Senior Savings & PO Deposit Program will be revised.

Shooting 7

Sr citizens’ savings plan becomes more attractive
The Treasury Department on Thursday announced a 30 basis point increase in interest rates on several small savings products next quarter. Against the backdrop of falling rates, the Center has kept its savings rate small due to high inflation and the need to ensure stability amid the Covid-19 pandemic. Some of the changes appear to be guided by how banks react to policy rate hikes due to RBI with further gains expected on Friday following the monetary policy committee meeting.
For example, the revaluation of two- and three-year postal deposits would be consistent with the rates offered by State Bank of India on deposits of similar terms. Of course, seniors enjoying an interest rate higher than 50 basis points is still better off, although that advantage could disappear over the next few months as bank deposit rates are forecast to rise further.
Similar, Savings program for the elderly was made more attractive, as the 60s could have been affected by higher inflation.
Although data for the last few years isn’t immediately available, according to figures from the National Small Thrift Institute. KVP has a total revenue of less than Rs 25,000 crore while PPF earned almost Rs 93,000 crore.

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