Small Savings Schemes new interest rates: In a major setback to saving goals of common man, the government has slashed the interest rates of small savings schemes.
Small Savings Schemes new interest rates: In a major setback to saving goals of common man, the government has slashed the interest rates of small savings schemes. This was notified by the Finance Ministry in a circular on Wednesday. This interest rate cut will be applicable on major savings schemes, including PPF, NSC, Sukanya Samriddhi, Senior Citizens Savings Scheme. The sharp cut in interest rates on these savings instruments have been announced for the first quarter of the financial year 2021-22. These rates had remained unchanged for the last three quarters.
After revision in the interest rate, new Public Provident Fund (PPF) scheme interest rate has been slashed to 6.4 per cent from 7.1 per cent for the April-June quarter. For the first time since 1974, the PPF interest rate is now below 7 per cent, a 46-year low.
New interest rate on PPF, NSC, Sukanya Samriddhi and Senior Citizens Savings Scheme
PPF: 6.4 per cent from 7.1 percent
Savings deposit: 3.5 per cent from 4 per cent
Meanwhile, the interest rate of the savings deposit has been brought down to 3.5 from its earlier 4.0 per cent. For the first time, the interest rate on savings deposits has been reduced by 0.5 per cent to 3.5 per cent from the existing 4 per cent annually. 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 per cent 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 per cent to 3.5 per cent 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 per cent less at 5 per cent, three-year term deposit rate will be down by 0.4 per cent and five- year term deposit rate will be lower by 0.9 per cent at 5.8 per cent.
The girl child savings scheme Sukanya Samriddhi Yojana account will offer 0.7 per cent lower rate at 6.9 per cent rate during the first quarter of the next fiscal.
The annual interest rate on Kisan Vikas Patra (KVP) has been reduced by 0.7 per cent to 6.2 per cent from 6.9 per cent.
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 per cent on inflationary concerns.
This is the second time the government has cut interest rates on small savings schemes in the past year. In the April-June quarter of 2020-21, the government had slashed rates of small savings schemes by 0.70-1.4 per cent.
Source :- zeebiz.com