The Government has accepted the recommendations of an expert panel, headed by former RBI Deputy Governor Shyamala Gopinath, to move to a market-linked interest rate system for small savings schemes, which means, higher returns to millions of small savings investors.
The upper limit on PPF investment has also been increased to Rs.1 lakh per year from the present Rs.70,000/- annual investment ceiling.
The proposals accepted are:
Interest on Savings Bank Deposit to be raised to 4% from the current rate of 3.5%
Interest on 5 Year Time Deposit to be raised to 8.3% from the current rate of 7.5%
Interest on 5 Year MIS to be raised 8.2% from the current rate of 8%
Interest on PPF to be raised to 8.6% from the current rate of 8%
Interest on 5 year NSC to be raised to 8.4% from the current rate of 8%
Maturity for Monthly Income Scheme and National Savings Certificate to be cut to 5 years from the present 6 years.
Payment of 5% bonus on MIS maturity to be discontinued
Interest on loans form PPF raised to 2% per annum from the present 1%
New National Savings Certificate with 10 year maturity period is to be introduced with 8.7% interest per annum.
Return on PPF, Public Provident Fund scheme is expected to be 8.6% from the present 8%.
Kisan Vikas Patra (KVP) to be discontinued.