The government on Wednesday said interest rates on post office savings schemes, except the PPF, will remain fixed throughout the term of the scheme.
New Delhi: The government on Wednesday said interest rates on post office savings schemes, except the PPF, will remain fixed throughout the term of the scheme.
It clarified that interest rate for such small savings will be declared on April 1 every year and will remain valid till the maturity of the scheme.
However, in case of Public Provident Fund (PPF), which is a 15-year scheme, interest rates would not remain fixed for the entire period. The annual interest accruals in the PPF account will depend upon the rate for that particular year, the finance ministry said.
"The rate of interest on small savings schemes will be aligned every year with rates of Government securities of similar maturity ... the rates are fixed and not floating so far as individual investments except PPF are concerned," it said, while responding to media reports that interest rates on all small savings schemes are floating.
With effect from December 1, 2011, the government has increased interest rates on PPF to 8.6 per cent from 8 percent now, and also raised ceiling on annual contributions to the fund to Rs 1 lakh from Rs 70,000.
Interest rates on savings account in post offices also rose to 4 percent from 3.5 percent. Similarly, interest rates on deposits of other maturities too was raised from December.
"The rate prevailing at the time of investments will remain fixed and unchanged till the maturity of the investment. Any revisions in interest rates in subsequent years will only be applicable to the investments made in the relevant period," it said.