The government has decided to marginally reduce the interest rates on Public Provident Fund (PPF) to 8.7% with effect from April 1, 2013, from the current 8.8%.
However, the rates on savings deposits and on fixed deposit of up to one year run by post offices has been retained at 4% and 8.2% respectively. The interest rate on monthly income schemes (MIS) of five-year maturity also has been cut by 0.1% to 8.4%.
Based on the decisions taken by the government on the recommendations of the Shyamala Gopinath Committee for Comprehensive Review of National Small Savings Fund (NSSF), the interest rates for small saving schemes are to be notified every financial year, before the first of April of that year. The interest rates will be applicable for the financial year 2013-14. The panel had recommended that returns should be in sync with market rates determined by the returns offered by other securities.
The interest rates on National Savings Certificates (NSC) having maturity of 5 years and 10 years have also been reduced by 0.1% to 8.5% cent and 8.8% respectively. So is the interest rate for senior citizens savings scheme (SCSS), which is down 0.1% to 9.2%.
Planning Commission deputy chairman Montek Singh Ahluwalia on Monday justified the cut in interest rates on small saving schemes saying: ?In real terms, inflation is much lower than it was two years ago. So, in real term, the interest rate is more favourable.?
Talking to mediapersons on sidelines of Skoch summit, he added, ?I don?t believe that interest rate for savers through the post office system can be delinked completely from the interest rate system in the country.?