The government has increased interest rates on Special Deposit Scheme (SDS) and State Provident Funds for the year 2012-13 to 8.8% from 8.6% currently.

The new rate will be applicable from April, 1, 2012, an official statement said.

"Government has revised the interest rates for the financial year 2012-13 in respect of State Provident Funds and Special Deposit Schemes (SDS) for non-government provident, superannuation and gratuity funds from 8.6% to 8.8% with effect from April, 1, 2012", it said.

SDS is a scheme in which the non-government provident funds like Employees' Provident Fund Organisation (EPFO) invest. At present, EPFO funds to the tune of Rs 55,000 crore are parked in the SDS.

The government has also hiked the interest rate on General Provident Fund from 8.6 to 8.8%.

The revised interest rate on government provident funds will benefit the subscribers of General Provident Fund (Central Services), Contributory Provident Fund (India), All India  Services Provident Fund, State Railway Provident Fund and  General Provident Fund (Defence Services).

Among others, Indian Ordnance Department Provident Fund, Indian Ordnance Factories Workmen's Provident Fund, Indian Naval Dockyard Workmen's Provident Fund, Defence Services Officers Provident Fund, and Defence Services Officers Provident Fund will also be getting 0.2% more interest, the statement said.