Due to three consecutive increases in interest rates on small savings programs, Post Office Fixed Deposits are once again in direct rivalry with Bank FD Rates. In accordance with small savings programs. The post office offers 6.9% interest on two-year fixed deposits, the same rate that most banks offer on accounts with the same maturity period.
The increase in repo rates started in May 2022
Let us inform you that the Reserve Bank began the process of raising the repo rate in May 2022. And that process has resulted in a rise from 4% to 6.50%. As a result, banks began offering higher interest rates on retail deposits. In the second half of the previous fiscal year in an effort to attract more funding. The weighted average domestic FD rate on new bank deposits increased to 2.22 percent from May 2022 to February 2023 as a result.
How much interest has the government raised so far?
At the same time, banks focused more on raising wholesale deposits in the first half of the fiscal year 2022–23, but in the second half, their focus shifted to increasing retail deposits. Part of this included the rise in interest rates. Interest rates for modest savings programs have been raised by the government by 0.1-0.3% for the October-December quarter, 0.2-1.1% for the January-March quarter, and 0.1-0.7% for the April-June 2023 quarter.
Prior to that, small savings scheme interest rates had been the same for nine straight quarters. Between the second quarter of the fiscal year 2020–21 and the second quarter of the fiscal year 2022–23, there was no growth in these. The interest rates for small savings plans are set by the government. Their decision is based on the yield on equivalent maturity government securities.
RBI informed that the Bank FD rates are now
competitively decided as compared to the post office fixed deposit rates. According to the Reserve Bank, which will increase to 6.9 percent in 2023 from 5.8 percent in September 2022 and 5.2 percent in March 2022.
What rate of interest is paid on tiny savings?
The two-year post office FD currently offers a return of 6.9%. After the interest rate on small savings plans was raised three times in a row. In September 2022, this percentage was 5.5 percent. 
What rate of interest does SBI offer?
The largest bank in the nation, SBI, offers 6.8% interest on deposits with terms between one year and two years. Likewise, SBI offers a seven percent interest rate on deposits with a maturity of two years or more but less than three.
Read more: Don’t you press the cancel button after withdrawing money from an ATM? you may get into trouble
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