Government likely to link interest on small saving schemes to bank deposits, RBI’s rate

The government may soon announce interest rate transmission policy under which the interest rates on small saving schemes like PPF and post office deposits may be renewed on a quarterly or half yearly basis.

Zee Media Bureau

New Delhi: The interest rate on your small saving schemes like PPF and post office deposits may soon see frequent renewals on a quarterly or half-yearly basis.

The finance Ministry in its internal discussion is looking at various options to arrive at modalities for reviewing more frequent renewal of interest rates on small saving schemes and chalking out an interest rate transmission policy.

According to The Times of India news report, the Economic Affairs Secretary​ Shaktikant Das said, whether to link the interest rates to government securities or to something else will be examined. He added that there have been suggestions that it should be linked to the repo rate or bank deposit rates. He added that the final decision was to be taken yet.

The finance ministry currently uses the returns on government securities to annually fix the rates for small saving schemes.

A large number of banks have sought lowered interest rates on small savings as high interest rates on these schemes makes the bank fixed deposits uncompetitive.