NE BUSINESS BUREAU
NEW DELHI, MAR 31
The government on Wednesday cut interest rates on small savings schemes, including NSC and PPF, by up to 1.1 percent 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 percent to 6.4 per cent while National Savings Certificate (NSC) will now earn 0.9 percent less at 5.9 per cent.
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 percent to 6.5 per cent. 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 percent to 3.5 percent from the existing 4 per cent annually.
The steepest fall of 1.1 per cent has been effected in the one-year term deposit. The new rate will be 4.4 per cent as compared to 5.5 per cent at the moment.
Similarly, two-year fixed deposit will earn 0.5 percent less at 5 percent, three-year term deposit rate will be down by 0.4 percent and five-year term deposit rate will be lower by 0.9 percent at 5.8 percent.
The girl child savings scheme Sukanya Samriddhi Yojana account will offer 0.7 percent lower rate at 6.9 percent rate during the first quarter of the next fiscal.
The annual interest rate on Kisan Vikas Patra (KVP) has been reduced by 0.7 percent to 6.2 percent from 6.9 percent.
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 percent on inflationary concerns.
