After a wait of nine months, the government on Thursday increased the interest rates on Post Office Small Savings Schemes by up to 40 basis points for the third quarter (October-December) of the ongoing financial year (FY 2018-19). The revised interest rates on some of the Small Savings Schemes are as under:
|Post Office Instrument||Rate of Interest w.r.t. 01.07.2018 to 30.09.2018||Rate of interest w.r.t. 01.10.2018 to 31.12.2018|
|1 year term deposit||6.60%||6.90%|
|2 year term deposit||6.70%||7.00%|
|3 year term deposit||6.90%||7.20%|
|5 year term deposit||7.40%||7.80%|
Despite the revision, the top Indian banks are offering higher interest rates on deposits for select tenures. The below table offers a comparative analysis of the interest rates offered by the Post Office against those offered by top Indian banks.
|Institution||1 year term deposit||2 year term deposit||3 year term deposit||5 year term deposit|
|State Bank of India||6.70%||6.75%||6.80%||6.85%|
Some of India’s major banks continue to outshine the Post Office, except for a five year tenure. In terms of safety, deposits with the Post Office count as government schemes and hence have a government guarantee. Bank deposits while relatively safe, only have a formal deposit guarantee up to Rs 1 lakh under the DICGC (Deposit Insurance Credit Guarantee Corporation).