Small savings interest rate slashed by 10 bps
NEW DELHI:
The finance ministry on Friday slashed the interest rates on small savings schemes such as national savings certificate (NSC), Sukanya Samriddhi Account, kisan vikas patra (KVP) and public provident fund (PPF) by 10 basis points for the July-September period, from the rates applicable for the previous quarter.
A finance ministry notification said that rates have been reduced across the board.
However, interest on savings deposits has been retained at 4% annually. Since April last year, interest rates of all small saving schemes have been recalibrated on a quarterly basis.
As per the notification, the PPF scheme will fetch lower annual rate of 7.8 %, while KVP will yield 7.5%.
The one for girl child savings, Sukanya Samriddhi Account Scheme, will offer 8.3% annually, from 8.4% in the first quarter. The investment on 5-year Senior Citizens Savings Scheme will yield 8.3%.
The interest rate on the senior citizens scheme is paid quarterly.
Term deposits of 1-5 years will fetch a lower 6.8-7.6% that will be paid quarterly while the 5-year recurring deposit has been pegged lower at 7.1% .
“On the basis of the decision of the government, interest rates for small savings schemes are to be notified on a quarterly basis,” the ministry said while notifying the rates for second quarter of financial year 2017-18.
While announcing the quarterly setting of interest rates, the ministry had said the rates of small saving schemes would be linked to government bond yields. The move is expected to prompt banks to lower the deposit rate in line with the small savings rate as offered by the government.