Revised Post office Interest Rates for Apr-16 to Jun-16

Latest-Revised-Post-office-Interest-Rates-for-Apr-16-to-Jun-16Revised Post office Interest Rates for Apr-16 to Jun-16


Last week, the Ministry of Finance announced revised interest rates for post office small saving schemes for the period Apr-2016 to Jun-2016 (1st Quarter). Most of the schemes interest rates were slashed by Ministry of Finance which is really a shocking for investors. For the past few years, post office interest rates had minor changes, but investors are not able to digest such high reduction in interest rates. In this article, I would provide latest updates on revised post office small saving schemes interest rates, which are effective from 1st April, 2016 to 30th June, 2016.

Revised Post office Interest Rates for Apr-16 to Jun-16


1) Sukanya Samriddhi Account, saving scheme for girl child, which has become a famous last year, interest rates are reduced for this scheme from 9.2% to 8.6%. You can read how to open Sukanya Samriddhi Account at post offices or at banks.

2) Public Provident Fund, which was one of the best retirement planning schemes, interest rates is reduced from 8.7% to 8.1%. There are several ways where you can get highest interest in a year for PPF.

3) Kisan Vikas Patra (KVP) was one of the best schemes to double your money in 100 months. Now interest rates are reduced from 8.7% to 7.8%.

4) Senior Saving Scheme, which was one good scheme for Senior Citizens, interest rates was slashed from 9.3% to 8.6%.

5) Post office MIS Scheme (POMIS), interest rates is reduced from 8.4% to 7.8%. If you are looking for fixed income every month, you can invest in POMIS cheme.

6) 5 Yr National Saving Certificate, interest rates is reduced from 8.5% to 8.1%.

7) 5 Year recurring deposit, interest rates are reduced from 8.4% to 7.4%.

8) 5 Year FD Scheme interest rates are reduced from 8.5% to 7.9%

9) 3 Year FD Scheme interest rates are reduced from 8.4% to 7.4%.

10) 2 Year FD Scheme interest rates are reduced from 8.4% to 7.2%.

11) 1 Year FD Scheme interest rates are reduced from 8.4% to 7.1%.

How do the interest rate changes impact you?


If you have been investing in Sukanya Samridhi Yojana Scheme or Public Provident Fund for Rs 1.5 Lakhs per year, at old rate you would got Rs 13,800 interest per annum and with revised rates, you would get Rs 12,900 . Means you would get Rs 900 per year less interest.  If you look at KVP, earlier your money would have doubled in 100 months, now it takes 110 months.

Where should you invest your money after reduction in interest rates in small saving schemes?


Though there is reduction in Post office schemes, I feel some of these schemes are still better. None of the other saving schemes would give highest interest rates that come from PPF or SSA.

If you want to double your FD, banks offer 7% to 7.5% where it would take at least 115 months to double your money. In post office KVP, it takes 110 months. Though there is a reduction in interest rate, still KVP is beneficial compared to bank FD schemes.

However, post office FD schemes were offering 8.4% to 8.5% interest rates for 1 to 5 years tenure earlier. These rates are now slashed to 7.1% to 7.9%. Banks are offering at 7% to 7.5% interest rates. Hence for some of the tenures, bank FD interests are better now. Ministry of finance has done a big favor to banks by slashing interest rates on post office FD schemes.

Complete summary of schemes with the old rate and revised rate (Applicable for period 1st April, 2016 to 30th June, 2016)


Revised Post office Interest Rates for Apr-16 to Jun-16

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Suresh
Revised Post office Interest Rates for Apr-16 to Jun-16

27 comments

  • Ratna Bhat

    whether revised interest rates on postal deposits are applicable only for a period from 01.04.2016 to 30.06.2016 only as mentioned above. if so, can we expect revision for better interest rates from 01.07.2016 onwards or alleast old rates would apply.

  • Venkatesh

    Thank you suresh

  • Vipul

    Can NRIs also invest in this??

    • No Vipul, NRI’s cannot invest in post office saving schemes. Alternatively you can invest in NRE FD which offer highest interest rates compared to these post office saving schemes

  • Philomina John

    I invested in SCSS last week (22 March 2016) :What will be the interest i am entitiled?

  • Venkatesh

    Thanks Suresh for the useful information. I read your posts every week to get the latest financial information.

    I have question on revised interest on “Sukanya-samriddhi-account-saving-scheme” . I opened the account 2015 for my child. Can you tell me this new interest rate is applicable for existing account holder or only for new account that opening in 2016 after April.

    Regards,
    Venkatesh G

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