Interest rates on small savings raised by up to 0.50 percent

New Delhi, March 26 (IANS) The government Monday announced raising of interest rates on small savings such as National Savings Certificate (NSC), Public Provident Fund (PPF) and post office deposits by up to 0.50 percent for the next financial year beginning April 1.

The one-year term deposit under the Small Savings Fund will attract 8.2 percent annual interest in 2012-13 as compared to 7.7 percent in the current financial year, the finance ministry said in a statement.

The interest rate on deposits of two-year maturity period will be raised to 8.3 percent from the existing 7.8 percent, while the rates on three-year term deposit will be raised to 8.4 percent from the existing 8 percent.

The interest rate on PPF will be raised to 8.8 percent in 2012-13 as compared to the current rate of 8.6 percent.

However, the rates on normal savings deposits remain unchanged at 4 percent.

The government's move is in line with the recommendations of the Shyamala Gopinath Committee which has advised to align the interest rates on small savings with the prevailing market rates.

The committee, headed by the former deputy governor of the Reserve Bank of India, has suggested that interest rates on small saving schemes should be revised every year and aligned with the market rates to make them more attractive.