Post Office Fixed Deposit investment: If you are planning to invest any amount in a fixed deposit plan, the humble post office near you might be the best place to do so in the next three-four days. The government is expected to announce the interest rates of small savings schemes for the October-December quarter next week. Post Office Time Deposit (or fixed deposit) is considered among the small savings schemes. Currently, post office is offering a better interest rate on its Time Deposit plans than several banks, including SBI. The interest rate on Post Office TD is 6.9 per cent on deposits for 1, 2 and years. For five-year time deposit, the rate is 7.7 per cent. Post Office’s some other schemes like NSC and KVP are being offered at the interest rates of 7.9 per cent and 7.6 per cent respectively.
Small savings scheme: Why rate cut is expected
- It is expected that the government may cut interest rates of small savings schemes. In the July-September quarter, the government had cut small savings schemes rates by 0.1 per cent.
- Since April 2016, it has been the government’s declared goal to align the small savings schemes with the yield of Government Securities (G-Sec). However, in the last one year, the small savings scheme rates have not been cut much even as the G-Sec yield has continued to decline. Currently, the G-Sec yield is at around 6.8 per cent, which is about 1.4 per cent down as compared to last year.
- In the first two of the last five quarters, the small savings rates were increased by 0.3-0.4 percentage points and remained unchanged in the following two quarters. In the last quarter, the small savings rates were cut by 0.1 percentage points across all schemes.
- It is expected that the government may decide to cut the rate further this time to bridge the gap between small savings schemes and G-Sec yield.
Hence, next three-four days may be the best time for you to lock-in an FD account at a higher amount.
Small savings include post office deposits, Public Provident Fund (PPF), Senior Citizen's Savings Scheme (SCSS), National Savings Certificate (NSC), Kisan Vikas Patra (KVP) and Sukanya Samriddhi Yojana (SSY).