for Non-Government Provident, Superannuation, Gratuity Funds: The Union Ministry of Finance has notified the interest rate for Special Deposit Scheme for Non-Government Provident, Superannuation and Gratuity Funds for the July-September quarter. The interest rate on deposits for this quarter will be 7.1 per cent, the Finance Ministry said. The new rate will be effective from July 1, 2020.
“It is hereby notified that the deposits made under the Special Deposit Scheme for Non-Government Provident, Superannuation and Gratuity Funds, announced in the Ministry of Finance (Department of Economic Affairs) Notification No.F.16(1)-PD/75 dated 30th June, 1975, shall with effect from
1st July, 2020 to 30th September, 2020 bear interest at 7.1% (seven point one per cent). This rate will be in force w.e.f. 1st July, 2020,” the Ministry of Finance said it an official notification.
What is Special Deposit Scheme for Non-Government Provident, Superannuation, Gratuity Funds?
The Special Deposit Scheme was launched by the Union Government on July 1, 1975, with an aim to provide better returns to non-government provident funds, gratuity and superannuation funds, surplus funds of LIC, ESIC etc. The scheme was initially launched for 10 years only but subsequently extended till 1998.
The funds invested in SDS grow at the interest rate announced by the government. These funds also earn by investing in government securities and mutual funds.
At the time of launch, the SDS offered an interest rate of 10 per cent. It remained at 12 per cent for around 15 years since April 1, 1986.
In 2018’s January-March quarter, SDS offered 7.6 per cent interest rate.
SDS is operated through several public sector banks and the RBI.
Initially, the organisations which invested in the Special Deposit Scheme included General Provident Fund, Contributory Provident Fund, All India Services Provident Fund, State Railway Provident Fund, Contributory Provident Fund etc.
The government has been reducing the increst rate on the Special Deposit Scheme in view of the high cost of borrowing and increasing the repayment burden.