June 01, 2020
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Govt Cuts Interest Rates On PPF, Other Small Savings Schemes

The interest rate on the five-year term deposit has been reduced to 6.7 per cent from current rate of 7.7 per cent.

Govt Cuts Interest Rates On PPF, Other Small Savings Schemes
Govt Cuts Interest Rates On PPF, Other Small Savings Schemes
outlookindia.com
2020-04-01T11:27:34+0530

The government on Tuesday slashed interest rates on small savings schemes, including NSC and PPF, by up to 1.4 percentage points for the first quarter of 2020-21, in line with moderation in bank deposit rates.

 Interest rates for small savings schemes are notified on a quarterly basis.

 "The rates of interest on various small savings schemes for the first quarter of the financial year 2020-21 starting April 1, 2020, and ending on June 30, 2020, have been revised," the finance ministry said in a notification.

With the reduction, term deposits of 1-3 years will now earn an interest rate of 5.5 per cent as against 6.9 per cent, down 1.4 percentage points, the notification said.

The interest rate on the five-year term deposit has been reduced to 6.7 per cent from current rate of 7.7 per cent, it said adding that interest rate on these are paid quarterly.

The interest rate moderation for Public Provident Fund (PPF) and National Savings Certificate (NSC) for the next quarter is 0.8 percentage points and 1.1 percentage points, respectively, it said. The rates will now stand at 7.1 per cent for PPF and 6.8 per cent for NSC.

The cut in the interest rate on a 5-year recurring deposit is 1.4 percentage points. The new rate for this saving instrument will be 5.8 per cent.

The interest rate for the five-year Senior Citizens Savings Scheme has been lowered by 1.2 percentage points to 7.4 per cent, from the existing 8.6 per cent. The interest on the senior citizens scheme is also paid quarterly.

However, interest on savings deposits has been retained at 4 per cent annually.

The Kisan Vikas Patra (KVP) will give a lower yield of 6.9 per cent with enhanced maturity period of 124 months as against 7.6 per cent and 113 months maturity at present.

While announcing the quarterly setting of interest rates in 2016, the finance ministry had said the rates of small savings schemes would be linked to government bond yields.

Instruments

Rate of interest from 01/04/2020 to 30/06/2020 (%)

Compounding Frequency*

 

 

 

Savings Deposit

4.0

Annually

1 Year Time Deposit

5.5

Quarterly

2 Year Time Deposit

5.5

Quarterly

3 Year Time Deposit

5.5

Quarterly

5 Year Time Deposit

6.7

Quarterly

5 Year Recurring Deposit

5.8

Quarterly

Senior Citizen Savings Scheme

7.4

Quarterly and Paid

Monthly Income Account

6.6

Monthly and Paid

National Savings Certificate

6.8

Annually

Public Provident Fund Scheme

7.1

Annually

Kisan Vikas Patra

6.9 (will mature in 124 months)

Annually

Sukanya Samriddhi Account Scheme

7.6

Annually

(With inputs from PTI)

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