THIRUVANANTHAPURAM: With an aim to ensure liquidity, the Treasury Department has increased interest on short-term fixed deposits, which will benefit investors. The interest rates for two-term deposits where more people are choosing to invest have been increased. The new rate came into effect from October 1.

At present, bank deposits earn higher interest rates than treasury deposits. In this situation, the rate hike has been implemented.

The interest rate on deposits between 181 and 365 days has been increased from 5.90 per cent to 6 per cent. The rate has been raised from 7 per cent from 6.40 per cent for deposits of 366 days to two years.

The current interest rate is 5.40 percent for loans with a tenure of 46 to 90 days, 5.90 percent for loans with a tenure of 91 to 180 days and 7.50 percent for loans with a tenure of more than two years. These were not changed. The interest rate on treasury deposits was revised last year. In the meantime, banks have increased interest rates on deposits several times, but the treasury has not changed much.

Investment

Due to the current problems, the government hopes that the interest rate increase will be useful to attract many people to the treasury deposits. Fixed deposits in the treasury will help the government, which is facing financial crisis.