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.
In a move expected to coax banks to lower their deposit rates, the government has reduced the interest rates on small saving schemes, including National Savings Certificates (NSCs), Public Provident Fund (PPF) and Kisan Vikas Patra (KVP), by 0.2 percentage point for the fourth quarter of the fiscal (January-March).
The PPF and NSCs will earn 7.6 per cent interest from January 1, 2018, while KVPs will earn even less (7.3 per cent), a Finance Ministry notification said on Wednesday.
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Earlier, PPF, NSC and KVP were offering 7.8, 7.8 and 7.5 per cent interest, respectively.
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Besides, while the Senior Citizen’s Savings Scheme of five-year period will offer 8.3 per cent interest, the Sukanya Samriddhi Yojana for the girl child will now offer 8.1 per cent.
The government retained the interest on savings deposits at 4 per cent, compounded annually.
The government on Wednesday announced it will undertake additional market borrowing of Rs 50,000 crore in the remaining period of the current fiscal to meet expenditure.
The reduction in small savings interest rates for the next quarter comes after official data showed on Tuesday that falling for the second consecutive month, the total revenue collected under GST touched Rs 80,808 crore in November — down from Rs 83,346 crore in October, possibly also due to the large scale rate cuts made last month.
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