Public Provident Fund account holders, small depositors, and persons keeping money in post office schemes, will get a higher rate of return from December 1, 2011.
The government on Thursday notified the increase in interest rates on PPF to from 8 to 8.6 per cent, and also raised the ceiling on annual contributions to the fund from Rs. 70,000 to Rs. 1 lakh.
Interest rates on savings accounts held in post offices will go up from 3.5 to 4 per cent.
The sale of Kisan Vikas Patras (KVP) will be discontinued from November 30. There was an apprehension about KVP, which was kind of a bearer instrument, that it was used for money laundering.
The maturity period of monthly investment schemes (MIS) and national savings certificates (NSC) would be reduced from six to five years.
MIS will earn an interest of 8.2 per cent, but accounts opened on/after December 1 will not be entitled for bonus.
Every Rs. 100 invested in NSCs will fetch Rs. 150.90 at the end of five years.
Loans taken from PPFs would attract an interest of two per cent per annum from December 1.
Commission will no longer be paid to agents for opening PPF accounts and Senior Citizens Savings Schemes, while commission for Mahila Pradhan Kshetriya Bachat Yojana has been fixed at four per cent. Agency commission for all other schemes has been halved to 0.5 per cent.