Small Savings to Yield Lower Returns

The interest rate on small savings schemes such as public provident fund (PPF), Sukanya Samriddhi Scheme (SSS), National Savings Certificate (NSC) and Kisan Vikas Patra (KVP) will fetch lower interest rate in the January-March quarter as the government has reduced the rate of interest by 20 basis points (100 basis points are equal to one per cent). Since April 2016, interest rates on small savings schemes have been market linked and are also linked to the yield of government securities of similar maturity period. The interest rate on PPF has been reduced from 7.8 per cent to 7.6 per cent. The interest rate on the girl child savings scheme has dipped from 8.3 to 8.1 per cent. KVP will now fetch 7.3 per cent while the interest rate on Senior Citizen Savings Scheme (SCSS) has been kept unchanged at 8.3 per cent, which is paid quarterly, but it is fully taxable.