New Delhi: The government has revised the interest rate on post office time deposit schemes while leaving rates of other popular small savings schemes like the PPF (Public Provident Fund), Sukanya Samriddhi account and Senior Citizen Savings schemes unchanged. Interest rates of small savings schemes are currently revised on a quarterly basis. The Finance Ministry, in a notification dated December 31, 2018, said that the interest rate on the 1-year post office time deposit had been hiked to 7% (compounding quarterly), for the January-March quarter, from 6.9% in the previous quarter. But the rate on the 3-year deposit has been lowered to 7% from 7.2%.

The interest rates on 2-year and 5-year post office deposits have been kept unchanged at 7% and 7.8% respectively. Similarly, the interest rate on the popular 5-year post office recurring deposit has been kept steady at 7.3%.

The interest rate on the PPF and the 5-year National Savings Certificate remains unchanged at 8% while the 5-year Monthly Income Account fetches 7.7%.

Similarly, the interest rates on Senior Citizen Savings schemes and popular girl child savings scheme Sukanya Samriddhi account remain unchanged at 8.7% and 8.5%, respectively, for the January to March quarter. The RBI had hiked interest rates twice in 2018 and small savings schemes like the PPF benefitted from the rate hikes. The PPF had regained its pole position in 2018 with an annual post-tax return of 7.7%. (Read: PPF regains the crown with the best returns)

Latest interest rate of small savings schemes

Interest rate of small savings scheme for the January-March quarter
Interest rate of small savings scheme for the January-March quarter

The government had hiked interest rates on various small savings schemes, including Public Provident Fund (PPF), Kisan Vikas Patra (KVP), National Savings Certificate, Monthly Income Scheme, Senior Citizen Savings Scheme (SCSS) and Sukanya Samriddhi Scheme (SSS), by 40 basis points (bps) for the October-December quarter, making them attractive for investors who want to invest in safe products. (Read: NPS withdrawal made tax-free like PPF, EPF)

Financial planners say that investors should go in for a well-balanced portfolio with some investments in safe products and some in equity.

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