Post Office TD VS Bank FDs: Post Office Fixed Deposits have once again stood in competition with Bank FD Rates due to three consecutive hike in interest rates on small savings schemes. Under small savings schemes, 6.9 percent 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.
Increase in repo rates started from May 2022
Let us tell you that 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. The effect of this was that in the second half of the last financial year, banks started paying more interest on retail deposits to raise more finance. As a result, during May 2022 to February 2023, the weighted average domestic fixed deposit rate on new deposits of banks increased to 2.22 percent.
How much has the government increased the interest so far?
At the same time, in the first half of the financial year 2022-23, the emphasis of banks was more on wholesale deposits, but in the second half their priority changed and they paid more attention to raising retail deposits. The increase in interest rates was a part of this. The government has increased interest rates for small savings schemes 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.
RBI gave information
The Reserve Bank said, “Banks’ fixed deposit rates are now competitively determined as compared to post office fixed deposit rates.” percent while it was 5.8 percent in September 2022 and 5.2 percent in March 2022.
How much interest is being received on small savings
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 percent. This rate was 5.5 percent in September 2022.
How much interest is SBI paying?
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.
