The Union Finance Ministry has increased the interest rates of small saving schemes by 30 to 40 bps (basis points). This is for the third quarter from October 1 to December 31.
A hundred basis points is equivalent to one percentage point.
The Finance Ministry made this announcement through a circular released on Wednesday.
The circular explains that the one-year, two-year and three-year time deposits have been increased by 30 basis points. The five-year time plan, five-year deposit scheme, and others have increased by 40 basis points.
This is a huge relief for small-time investors since it was reported earlier in July that there would not be an interest hike for the second quarter.
According to The Economic Times, a hike has been expected since the government had linked the schemes to the yields of government bonds of the same maturity.
The Reserve Bank of India had also increased the repo rates by 50 basis points in its last two bi-monthly monetary policies.