The Finance Ministry on Friday said that interest rates for small savings schemes will be reduced by 10 basis points for July-September quarter of the ongoing financial year. Schemes that will fetch lower interest are Kisan Vikas Patra (KVP), Public Providend Fund (PPF), among others, barring interest on savings deposits that has been retained at 4%.
“On the basis of the decision of the government, interest rates for small savings schemes are to be notified on a quarterly basis," the Finance Ministry said in a statement.
The government’s decision to reduce interest rates on small savings scheme comes at a when the banking regulator has slashed benchmark rates thrice by cumulative 75 basis points since January.
PPF and National Savings Certificate (NSC) will yield 7.9% annual interest from the earlier 8%. KVP will fetch 7.6% with maturity of 113 months as compared with 7.7% with maturity of 112 months.
The girl child savings scheme Sukanya Samriddhi Account will fetch a lower return of 8.4% as compared with 8.5%. Similarly, term deposits of 1-3 years will fetch interest rate of 6.9%, to be paid quarterly, while the five-year quarterly pegged at 7.7% and for recurring 7.2% from existing rate of 7.3%.
With inputs from PTI