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Sharp Hike In Q3 Interest Rates On Small Savings Schemes

The Govt. has increased the interest rates on various Post Office Small Savings Schemes for the 3rd quarter of the current financial year 2018-19.

This announcement was made by the Department of Economic Affairs, Ministry of Finance vide its Office Memorandum — Revision of interest rates for Small Savings Schemes — dated Sept 19, 2018.

This hike in interest rates is a welcome change after a long time. And, a bit surprisingly, it's a rather steep increase of 0.3-0.4%.

As you may be aware, during the Financial Year 2017-18, the interest rates were REDUCED by a total of 0.40%. Thereafter, for the first six months of the current Financial Year 2018-19 from April to Sept, the 'reduced' rates were maintained.

Accordingly, the revised interest rates on various Post Office Small Savings Schemes for Quarter-3 2018-19 — i.e. Oct 1st to Dec 31st, 2018 — are detailed below:

Public Provident Fund (PPF) : Up from 7.6% to 8.0% p.a. [compounded annually]

5-year National Saving Certificate (NSC)Up from 7.6% to 8.0% p.a. [compounded annually]

Monthly Income SchemeUp from 7.3% to 7.7% p.a. [monthly compounding and paid out]

Senior Citizens Savings SchemeUp from 8.3% to 8.7% p.a. [quarterly compounding and paid out]

Time Deposits
1-year DepositUp from 6.6% to 6.9% p.a.
2-year DepositUp from 6.7% to 7.0% p.a.
3-year DepositUp from 6.9% to 7.2% p.a.
5-year DepositUp from 7.4% to 7.8% p.a.
(All on quarterly compounding basis)

5-year Recurring DepositUp from 6.9% to 7.3% p.a. [compounded quarterly]

Kisan Vikas PatraUp from 7.3% to 7.7% p.a. [compounded annually] 
(The scheme will double your money in 112 months as compared to earlier 118 months)

Sukanya Samriddhi SchemeUp from 8.1% to 8.5% p.a. [compounded annually]

Savings Deposit : Unchanged at 4% p.a. [compounded annually]

Smile is back on PO Small Savings Schemes depositors' faces.

With this increase, I suppose the recent favourite 7.75% Savings (Taxable) Bonds will lose some shine.

1. As per the present policy, interest rates on Post Office Small Savings Schemes are reset periodically on a quarterly basis.
2. The revised interest rates apply only to the "new accounts" opened during the respective period (except PPF and Sukanya Samriddhi Scheme, where the new rate is applied on the outstanding account balance). For the existing accounts under all other schemes, the contracted interest rate remains unchanged until maturity.

Meanwhile, interest rates for the previous two quarters of the current financial year can be accessed as under:
- Interest Rates On Small Savings Schemes Unchanged For Apr-Jun 2018
- Small Savings Schemes Q2 FY18-19 Interest Rates Steady

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