- Interest rate on small savings schemes has seen sharp cut in line with moderation in bank deposit rates
- Post office term deposits have seen the biggest cut
As widely expected, the government has sharply cut the interest rate on small savings schemes, including the popular Public Provident Fund or PPF. The new rates are applicable for this quarter, from 1st April to 30th June 2020. Interest rates for small savings schemes are notified on a quarterly basis. This was done in line with a moderation in overall interest rate in the financial system. The interest rates on small savings schemes are based on comparable yields on government securities but they have not been strictly followed in some quarters, say analysts.
Here are the interest rate on small savings schemes for this quarter:
PPF: The popular tax, long-term savings scheme, which matures in 15 years, has seen an interest rate cut of 80 basis points. For this quarter, PPF will fetch 7.1% as compared to 7.9% earlier.
Sukanya Samriddhi Yojana: The popular girl child savings scheme Sukanya Samriddhi Yojana account will earn a lower rate of 7.6%,against 8.4% earlier.
Senior Citizen Savings Scheme: The senior citizens scheme will offer 7.4%, from the earlier 8.6%.
NSC: National Savings Certificate will fetch 6.8% as compared to 7.9% earlier.
5-Year Post Office RD: This recurring deposit scheme offered by post offices will get new investors 5.8%, as compared to 7.2% earlier.
KVP: The Kisan Vikas Patra (KVP) will now mature or double in value in 124 months, instead of 113 months earlier, giving a lower yield of 6.9% as compared to 7.6% earlier.
Post Office Term Deposits: With the latest reduction, post office term deposits of 1-3 years will now earn an interest rate of 5.5% as against 6.9%, down 140 basis points. The interest rate on the five-year term deposit has been reduced to 6.7% from 7.7%.
However, interest on savings deposits has been retained at 4% annually.
