GOVT TRIMS SMALL SAVINGS INTEREST RATE BY 20 BPS

The government slashed interest rates on small savings schemes on Wednesday, including National Savings Certificate and Public Provident Fund, by 0.2 percentage points for the January-March period from the rates applicable in the previous quarter, a move that will prompt banks to lower deposit rates. Investments in the five-year Senior Citizens Savings Scheme has been retained at 8.3 per cent.

The government on Wednesday slashed interest rates on small savings schemes by 0.2 percentage point for the January-March period from the rates applicable in the previous quarter, a move that will prompt banks to lower deposit rates.

At the same time, investments in the five-year Senior Citizens Savings Scheme has been retained at 8.3 per cent. The interest rate on the senior citizens’ scheme is paid quarterly.

A finance ministry notification said rates had been reduced across the board for schemes such as National Savings Certificates (NSC), Sukanya Samriddhi Account, Kisan Vikas Patra (KVP) and Public Provident Fund (PPF). However, interest on savings deposits has been retained at four per cent annually. Since April last year, interest rates on all small savings schemes have been recalibrated on a quarterly basis.

PPF and NSC will fetch a lower annual rate of 7.6 per cent, while KVP will yield 7.3 per cent and mature in 11 months.

The girl child savings scheme Sukanya Samriddhi Account will offer 8.1 per cent from existing 8.3 per cent annually. Term deposits of 15 years will fetch a lower interest rate of 6.6-7.4 per cent, to be paid quarterly, while the five-year recurring deposit is pegged at 6.9 per cent. While announcing the quarterly setting of interest rates, the ministry had said that rates of small savings schemes would be linked to government bond yields.