The interest rate on 1-year post office time deposits (POTD), a small savings scheme, has been increased by 10 basis points (bps) for the January-March, 2019 quarter. According to a circular issued by the Finance Ministry, interest rates of other small savings schemes like Public Provident Fund (PPF) and Sukanya Samriddhi Yojana (SSY) have been kept unchanged, according to the Economic Times.
One year POTD will now fetch 7%, up from 6.9% for the previous quarter. The interest rate on three-year POTD has been reduced by 20 bps to 7%. Interest rate on two year and five year POTD has been kept unchanged at 7% and 7.8% respectively.
Interest on other small savings schemes such as Senior Citizen Savings Scheme (SCSS), Kisan Vikas Patra (KVP) and others have also been kept unchanged. SCSS will continue to fetch 8.7% whereas KVP will fetch 7.7%.
The interest rate is calculated by adding up a mark-up to the average of the government yield of the previous quarter. The formula was given by the Shyamala Gopinath Committee to determine the interest rates of the schemes. The committee had suggested that the interest rates of different schemes should be 25 -100 bps higher than the yields of the government bonds of similar maturity.