New Delhi: Interest rates on small savings schemes such as Sukanya Samriddhi, National Savings Certificates (NSC) and PPF may be slashed in the coming months.
As per a few media reports, it is being claimed that the central government can take a decision on cutting the interest rates of small savings schemes by the end of June, and if this happens, from July 1, small savings schemes will fetch lesser interest.
It may be recalled that the government had on April 1 revoked a steep interest rate cut on small savings schemes such as PPF and NSC, with Finance Minister Nirmala Sitharaman saying it was an oversight — a move being seen as an attempt by the BJP to contain the fallout of such a decision hitting common people amid the ongoing elections in West Bengal and Assam.
The government routinely announces interest rates for small savings schemes at the end of every quarter.
Interest rate on PPF was reduced by 0.7 per cent to 6.4 per cent while NSC was to earn 0.9 per cent less at 5.9 per cent. The highest cut of 1.1 per cent was effected in the one-year term deposit. The new rate was brought down to 4.4 per cent as compared to 5.5 per cent.
It is to be noted that the rates on fixed deposits under small savings scheme are regulated by the government while banks are free to decide their deposit and lending rates based on their asset liability position. As a result fixed deposit rates of different banks vary unlike under small savings schemes.
As rates have been restored, PPF and NSC earns an annual interest rate of 7.1 per cent and 6.8 per cent, respectively.
One-year term deposit scheme continues to earn an interest rate of 5.5 per cent during the first quarter of the current fiscal while the girl child savings scheme Sukanya Samriddhi Yojana account earns 7.6 per cent as against reduced rate of 6.9 per cent.
The interest rate on the five-year senior citizens savings scheme has been retained at 7.4 per cent. The interest on the senior citizens’ scheme is paid quarterly.
Interest rate on savings deposits has been restored at 4 per cent annually from the reduced rate of 3.5 per cent.
Term deposits of one to five years fetches an interest rate in the range of 5.5-6.7 per cent, to be paid quarterly while the interest rate on five-year recurring deposits earns a higher interest of 5.8 per cent as against the reduced 5.3 per cent currently.