A “centre leader” counts money to be distributed as a micro-loan at a meeting organized by a microfinance institution in Sadasivpet, India. (Photographer: Adeel Halim/Bloomberg)

Government Keeps Rates On Small Savings Schemes Unchanged

The government has kept the interest rates on small savings schemes, including NSC and PPF, unchanged for the July-September quarter. The move is aimed at matching the hardening interest rates in the banking sector.

Interest rates for small savings schemes are notified on a quarterly basis.

“...the rates of interest on various small savings schemes for the second quarter of financial year 2018-19 starting July 1 and ending on Sep. 30, 2018 shall remain unchanged from those notified for the fourth quarter of financial year 2017-18,” the Finance Ministry said while notifying the rates for the second quarter.

Interest rate for the five-year Senior Citizens Savings Scheme has been retained at 8.3 percent. The interest on the senior citizens’ scheme is paid quarterly. Interest on savings deposits has been retained at 4 percent annually.

Public Provident Fund and National Savings Certificate will fetch annual interest rate of 7.6 percent while Kisan Vikas Patra will yield 7.3 percent and mature in 11 months. The girl child savings scheme Sukanya Samriddhi account will offer 8.1 percent rate.

Term deposits of 1-5 years will fetch interest rate of 6.6-7.4 percent, to be paid quarterly, while the five-year recurring deposit is pegged at 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. The move is expected to see banks lowering their deposit rates in line with the small savings rate offered by the government.