The government has modified the Post Office time deposit rates for the January-March quarter of 2019 and made the interest rates offered on deposits for 1 to 3 years uniform at 7 per cent from the earlier rates of 6.9 per cent for 1-year, 7 per cent for 2-year and 7.2 per cent for 3-year time deposits. Thus, the rate of 1-year deposit has been increased by 0.1 per cent and that of 3-year deposit has been reduced by 0.2 per cent, while the 2-year deposit rate has been left untouched at 7 per cent along with the 5-year time deposit interest rate of 7.8 per cent. The interest rates of Post Office Savings Account, RD, MIS, SCSS, PPF, NSC, KVP and Sukanya Samridhhi are also left untouched.
The following table shows the old and new rates of Post Office deposits:
While the prospective investors of 1-year time deposits would gain and those of 3-year deposits would lose after the rate change, let’s check how the Post Office time deposits now stand against the FDs of various banks.
Deposits of Post Office Vs SBI, PNB, BOB and other PSU banks
Despite the reduction in the interest rate of 3-year deposit, the Post Office time deposits still fare better than those of PSU banks. Out of the PSU banks, Punjab National Bank offers the highest FD rate of 6.9 per cent for 1-year deposits and the lowest rate of 6 per cent is offered by United Bank of India against the deposits between 1 year and 2 years. While the State Bank of India (SBI) offers 6.8 per cent for deposits between 1 year and 2 years, Bank of Baroda offers 6.85 per cent for deposits above 1 year to 400 days.
Post Office Vs HDFC, ICICI and other private sector banks
Private sector banks offer a wide range of durations for FDs and the rate of interest also varies accordingly. With the highest rate of 8 per cent for deposits of 1 year to below 1 years 2 months, Indus Ind Bank beats the highest rate of 7.8 per cent offered by Post Office on 5-year deposits, while may other private sector banks offer interest rate of around 7 per cent. While HDFC bank offers its highest rate of 7.3 per cent on 1-year deposit, ICICI bank offers 6.9 per cent on the deposits of 1 year to 389 days.
Post Office Vs cooperative banks
Many cooperative banks also offer interest rate of over 7 per cent, giving better return than Post Office for 3-year period. The highest rate of 7.65 per cent is offered by Bandhan Bank on deposits above 18 months to less than 2 years, while the lowest rate of 6.5 per cent is offered by Abhyudaya Cooperative Bank on deposits above 1 year to 455 days.
Post Office Vs foreign banks
Foreign banks offer the widest range of interests, ranging from as high as 8 per cent to 4 per cent. Many foreign banks lags behind Post Office deposits with interest rates of below 6 per cent. While Deutsche Bank offers the highest rate of 8 per cent on deposits above 1 year to 1 year 6 months, Standard Chartered Bank offers interest rates of 7 per cent or more on deposits of various durations. Other foreign banks offer interest rate of 6 per cent or less, with Royal Bank of Scotland offering lowest rate of 4 per cent on deposits of 1 year to less than 2 years.
Following table shows interest rates (from high to low) offered by different categories of banks: