Government Slashes Interest Rates On Small Saving Schemes
A piggy bank is arranged for a photograph. (Photograph: Carla Gottgens/Bloomberg)

Government Slashes Interest Rates On Small Saving Schemes

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The central government on Wednesday slashed interest rates on small saving schemes for the first quarter of the next fiscal.

Interest rates applicable on various small saving schemes have been cut in the range of 50-110 basis points from January-March 2021 to April-June 2021, according to a notification by the finance ministry.

One of the sharpest cuts is in term deposit schemes - the rate on a one-year time deposit stands reduced from 5.5% to 4.4%. The return on the five-year time deposit has been cut from 6.7% in January-March to 5.8% in April-June.

The interest rate on Public Provident Fund scheme savings have been reduced to 6.4% from 7.1% during this period. With this, the interest rate on PPF stands at a 46-year-low.

From April 1, the interest rate on National Savings Certificate will be 5.9%, down from 6.8% earlier. The rate on Senior Citizen Savings Scheme is now 6.5% against 7.4% earlier, and on a savings deposit it will be 3.5%, compared with 4% at present.

The Sukanya Samriddhi Account Scheme will fetch an interest rate of 6.9%, from an earlier 7.6%.

Since the onset of the Covid-19 pandemic, this is the second time that the government has reduced interest rates on these schemes in a year. Interest rates on small saving schemes were last reduced in April-June of 2020, when they were slashed by 70-140 basis points.

Finance Ministry Notice.
Finance Ministry Notice.
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