Interest rates on small savings to go up

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There is good news for small savers: the government on Friday raised interest rates on post office savings and the public provident fund.

The interest rate paid on a post office savings account has been increased from 3.5 per cent to four per cent per annum. The interest rate on your Public Provident Fund (PPF) account has been raised to 8.6 per cent from the current eight per cent.

The annual amount that can be invested in PPF to save tax has been increased from Rs 70,000 per year to Rs 1 lakh while the Kisan Vikas Patras (KVPs) has been discontinued.

Interest rates on all fixed deposits with the post office have been hiked. The maximum increase was on the one-year time deposit with the rate revised to 7.7 per cent from 6.25 per cent.