Government slashes rates on small savings schemes by up to 1.1%

March 31, 2021 0 Comments


Interest rate on Public Provident Fund (PPF) has been reduced by 0.7% to 6.4% while National Savings Certificate (NSC) will now earn 0.9% less at 5.9%.

The government on Wednesday cut interest rates on small savings schemes, including NSC and PPF, by up to 1.1% for the first quarter of 2021-22 in line with falling fixed deposit rates of banks.

Interest rate on Public Provident Fund (PPF) has been reduced by 0.7% to 6.4% while National Savings Certificate (NSC) will now earn 0.9% less at 5.9%.

Interest rates for small savings schemes are notified on a quarterly basis.

The rates of interest on various small savings schemes for the first quarter of the financial year 2021-22 starting from April 1 and ending on June 30, 2021, has been revised, the finance ministry said in a notification.

The interest rate for the five-year Senior Citizens Savings Scheme has also been reduced steeply by 0.9% to 6.5%. The interest on the senior citizens’ scheme is paid quarterly.

For the first time interest rate on savings deposits has been reduced by 0.5% to 3.5% from the existing 4% annually.

The steepest fall of 1.1% has been effected in the one-year term deposit. The new rate will be 4.4% as compared to 5.5% at the moment.

Similarly, two-year fixed deposit will earn 0.5% less at 5%, three-year term deposit rate will be down by 0.4% and five-year term deposit rate will be lower by 0.9% at 5.8%.

The girl child savings scheme Sukanya Samriddhi Yojana account will offer 0.7% lower rate at 6.9% rate during the first quarter of the next fiscal.

The annual interest rate on Kisan Vikas Patra (KVP) has been reduced by 0.7% to 6.2% from 6.9%.

While announcing the quarterly setting of interest rates in 2016, the finance ministry had said that rates of small savings schemes would be linked to government bond yields.

Last month, the Reserve Bank of India (RBI) kept interest rates static for the fourth time in a row at 4% on inflationary concerns.



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