A finance ministry notification said rates have been reduced across the board for schemes such as National Savings Certificate (NSC), Sukanya Samriddhi Account, Kisan Vikas Patra (KVP) and Public Provident Fund (PPF).
In a major development, the government on Tuesday slashed interest rates on small savings schemes, including NSC and PPF, by 0.2 percentage point for the January-March period from the rates applicable in the previous quarter, a move that will prompt banks to lower deposit rates. At the same time, investments in the five-year Senior Citizens Savings Scheme has been retained at 8.3 per cent. The interest rate on the senior citizens scheme is paid quarterly.
A finance ministry notification said rates have been reduced across the board for schemes such as National Savings Certificate (NSC), Sukanya Samriddhi Account, Kisan Vikas Patra (KVP) and Public Provident Fund (PPF). However, interest on savings deposits has been retained at 4 per cent annually. Since April last year, interest rates on all small savings schemes have been recalibrated on a quarterly basis. Here are all the details:- -As per the notification, PPF and NSC will fetch a lower annual rate of 7.6 per cent while KVP will yield 7.3 per cent and mature in 11 months.
-The girl child savings scheme Sukanya Samriddhi Account will offer 8.1 per cent from existing 8.3 per cent annually.
-Term deposits of 1-5 years will fetch a lower interest rate of 6.6-7.4 per cent, to be paid quarterly, while the five-year recurring deposit is pegged at 6.9 per cent. Small Savings schemes – Revised interest rate details
|Instrument||Rate of interest (old)||Rate of interest (new)||Compounding frequency|
|1 Year Time Deposit||6.8||6.6||Quarterly|
|2 Year Time Deposit||6.9||6.7||Quarterly|
|3 Year Time Deposit||7.1||6.9||Quarterly|
|5 Year Time Deposit||7.6||7.4||Quarterly|
|5 Year Recurring Deposit||7.1||6.9||Quarterly|
|5 Year Senior Citizen Savings Scheme||8.3||8.3||Quarterly and paid|
|5 Year Monthly Income Account||7.5||7.3||Monthly and paid|
|5 Year National Savings Certificate||7.8||7.6||Annually|
|Public Provident Fund Scheme||7.8||7.6||Annually|
|Kisan Vikas Patra||7.5 (will mature in 115 months)||7.3 (will mature in 118 months)||Annually|
|Sukanya Samriddhi Account Scheme||8.3||8.1||Annually|
*The green colour signifies that interest rate on Savings Deposit and 5 Year Senior Citizen Savings Scheme has not been changed “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 fourth quarter of the 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.