This scheme of post office is giving tough competition to bank FD in terms of returns, investment can get more profit
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Post Office Scheme: Due to the increase in interest rates on small savings schemes for three consecutive times, the fixed deposits of the post office have once again stood in competition with the bank FDs. Under the Small Savings Schemes, 6.9 per cent interest is being given on two-year fixed deposits in the post office, which is equal to the rate offered by most banks on deposits of the same maturity period. The Reserve Bank started the process of increasing the repo rate in May 2022 and since then it has increased from four percent to 6.50 percent.
Higher interest on retail deposits: In the second half of the last financial year, banks started paying higher interest on retail deposits to raise more finance. During May 2022 to February 2023, the weighted average domestic fixed deposit rate (WADTDR) on new deposits of banks increased to 2.22 per cent. At the same time, in the first half of the financial year 2022-23, the emphasis of banks was more on bulk deposits. But in the second half, his priority changed and he focused more on raising retail deposits. The increase in interest rates was a part of this.
The government raised interest rates for small savings schemes (SSI) by 0.1-0.3 per cent for the October-December quarter, 0.2-1.1 per cent for the January-March quarter and 0.1-0.7 per cent for the April-June 2023 quarter. Earlier, interest rates on small savings schemes had remained unchanged for nine consecutive quarters. There was no increase in these from the second quarter of the financial year 2020-21 to the second quarter of 2022-23.
The government decides the interest rates on small savings schemes. Their determination is linked to the yield on government securities of comparable maturity. The Reserve Bank said, “The fixed deposit rates of the banks are now set competitively as compared to the post office fixed deposit rates. According to the Reserve Bank, the WADTDR on bank retail deposits with maturity of one to two years will be 6.9 per cent in February 2023, compared to 5.8 per cent in September 2022 and 5.2 per cent in March 2022.
After increasing the interest rate on small savings schemes for three consecutive times, the two-year post office fixed deposit is now getting a return of 6.9 per cent. This rate was 5.5 percent in September 2022. The country’s largest bank SBI is paying 6.8 percent interest on deposits of more than one year and less than two years. At the same time, SBI’s interest rate on deposits of more than two years and less than three years is seven percent.
Banks have increased their external benchmark-based lending rates (EBLR) by up to 2.50 per cent in line with the increase in the policy repo rate during May 2022-March 2023. During this, the internal standard of loan pricing MCLR increased by 1.40 per cent.
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