The central government ahs decided to increase interest rates offered on small savings schemes including post office savings scheme, National Savings Certificate, and public provident fund.

The interest rates on these schemes have been lower than what a saver can earn from keeping the funds in a savings account in any of the country's banks. The government is planning to change that with an overhaul of these schemes.

The government has finalized plans to increase the interest rates on post office savings deposits to 4 per cent, a move that is set to benefit millions savings deposit holders.

The interest rate for post office savings deposits is 3.5 per cent at present. "We have taken a decision. We will be issuing a release on that soon," Economic Affairs Secretary R Gopalan said.

The small scale saving schemes offered by the post offices were not taken up by savers looking at higher interest rates offered by banks in the country. Most banks are already offering a 4 per cent interest rates on savings accounts and after the deregulation of interest rates on savings account; some banks are planning to increase the rate to as much as 6 per cent.

A review panel, the Shyamala Gopinath Committee has recommended linking of interest rates on small savings with rates prevalent in the market. The committee ahs also recommended an increase in interest rate for one-year small deposit scheme to 6.8 per cent from 6.25 per cent and introduction of 10-year National Saving Certificate scheme.

The government ahs also introduced a 10-year national savings certificate (NSC) and increased the limit for public provident fund deposits to one lakh rupees every year and discontinued the Kisan Vikas Patra.