Finance Ministry on Wednesday has announced a cut in interest rates of small savings scheme. According to the circular by ministry, the rates of small savings schemes have been reduced by 50-100 basis points. Interest rates for small savings schemes are reviewed and notified by the finance ministry on a quarterly basis.
From 1 April, Public Provident Fund (PPF) will fetch interest rate of 6.4%. The National Savings Certificate (NSC) will witness an interest rate of 5.9%. Among the small savings scheme, the girl child savings scheme Sukanya Samriddhi Yojana will continue to fetch the interest rate. It will continue to offer 6.9%.
Similarly, the interest rate for the five-year Senior Citizens Savings Scheme has been retained at 6.5%. The interest on the senior citizens’ scheme is paid quarterly. The interest rate on Kisan Vikas Patra (KVP) has been retained at 6.2%.
Interest rate on post office savings deposits has been retained at 3.5%. On the other hand, term deposits of one-five years will fetch interest rate in the range of 4.4-5.8%, to be paid quarterly, while the interest rate on five-year recurring deposit is pegged at 5.8%.
The government continues to rely on small savings for financing its fiscal deficit, say economists. “For FY22 again financing from small savings is pegged at a significant ₹3.9 lakh crore or 26% of the fiscal deficit,” SBI economists had earlier said in a note.
For the April-June quarter of last year, the government had cut interest rates on small savings schemes by up to 140 basis points and since then they have remained steady.
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