Govt slashes small savings interest rate by 10 basis points
New Delhi: The government on Friday slashed interest rates on small savings schemes by 10 basis points for the July-September period from the rates applicable in the previous quarter, a move that will prompt banks to lower deposit rates.
A finance ministry notification said rates have been reduced across the board for schemes such as National Savings Certificate, Sukanya Samriddhi Account, Kisan Vikas Patra (KVP) and Public Provident Fund (PPF). However, interest on savings deposits has been retained at 4% annually.
Since April last year, interest rates on all small savings schemes have been recalibrated on a quarterly basis.
A basis point is one-hundredth of a percentage point.
As per the notification, PPF will fetch a lower annual rate of 7.8% while KVP will yield 7.5% and mature in 115 months. The girl child savings scheme Sukanya Samriddhi Account will offer 8.3% annually. Investments in the five-year Senior Citizens Savings Scheme will yield 8.3%. The interest rate on the senior citizens’ scheme is paid quarterly.
Term deposits of 1-5 years will fetch a lower rate of 6.8-7.6%, to be paid quarterly, while the five-year recurring deposit is pegged at 7.1%.
“On the basis of the decision of the government, interest rates for small savings schemes are to be notified on a quarterly basis,” the ministry said, while notifying the rates for second quarter of financial year 2017-18.
While announcing the quarterly setting of interest rates, the 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.
PTI contributed to this story.
- IMF estimates higher crude oil prices may not have any significant impact on India’s GDP
- Opening bell: Asian markets open higher; Bharti Infratel, Axis Bank, Biocon in news
- Indian scientists using artificial intelligence to predict early onset of Alzheimer’s
- People need to make preventive measure a habit if India is to become malaria-free by 2027: home insecticides makers
- Bollywood is in love with biopics. But will it last?