Govt withdraws interest rate cut in small savings schemes, calls it oversight
The interest rates on such schemes will continue to remain as they were during January-March, reversing Wednesday’s highest cut of 1.1 per cent.
Keeping the ongoing COVID-19 pandemic effect into consideration, the government has recently introduced several measures to provide relief to the low-earning masses. But on the other hand, as experts had expected, it brought down interest rates in small savings schemes, including National Savings Certificate (NSC) and Public Provident Fund (PPF) hovering between 70 basis points to 140 basis points for the first quarter (April-June) of FY 2020-21.
Interest rates for small savings schemes are notified on a quarterly basis. The latest deductions are done in line with a moderation in overall interest rate in the financial system.
Here are the latest interest rates on different savings schemes for the first quarter.
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PPF: After the latest deductions, interest rates on the Public Provident Fund (PPF), the popular tax and long-term saving scheme, has seen a rate cut of 80 bps.
The scheme which matured in 15 years will now fetch 7.1 per cent against previous interest rates of 7.9 per cent.
Sukanya Samriddhi Yojana: The popular girl child savings scheme will now attract 7.6 per cent against 8.4 per cent.
Similarly, saving scheme for elderly people i.e. Senior Citizen Savings Scheme will now offer 7.4 per cent instead of the previous rates 8.6 per cent.
National Savings Certificate: The savings scheme will now get interest rates at 6.8% as compared to 7.9% earlier.
The 5-year Post Office RD will now get 5.8 per cent instead of 7.2 per cent.
All the new interest rates on the small savings schemes will be valid from April 1 to June 30, 2020.
Per Cent change in Small Savings schemes interest Rates
| Instrument | Interest rate (%) from Jan 1, 2020 | Interest rate (%) from April 1, 2020 | Change(%) |
| Savings deposit | 4 | 4 | 0 |
| 1 year Time Deposit | 6.9 | 5.5 | -1.4 |
| 2 year Time Deposit | 6.9 | 5.5 | -1.4 |
| 3 year Time Deposit | 6.9 | 5.5 | -1.4 |
| 5 year Time Deposit | 7.7 | 6.7 | -1 |
| 5 year Recurring Deposit | 7.2 | 5.8 | -1.4 |
| 5 year Senior Citizen Savings Scheme | 8.6 | 7.4 | -1.2 |
| 5 year Monthly Income Account | 7.6 | 6.6 | -1 |
| 5 year National Savings Certificate | 7.9 | 6.8 | -1.1 |
| Public Provident Fund | 7.9 | 7.1 | -0.8 |
| Kisan Vikas Patra | 7.6 | 6.9 | -0.7 |
| Sukanya Samriddhi Yojana | 8.4 | 7.6 | -0.8 |
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