NEWS

Govt slashes interest rates on small savings, PPF hits 46-year low

Govt cuts interest on PPF by 0.7% to 6.4%, making it the lowest in 46 years.

The government on Wednesday cut interest rates on small savings schemes, after keeping them untouched for three straight quarters.

Interest on Public Provident Fund (PPF) has been reduced by 0.7% to 6.4%, making it the lowest in 46 years. This is the first time since 1974 that the PPF interest rate is quoting below 7%.

National Savings Certificate (NSC) will now fetch 0.9% less at 5.9%.

Interest rates on small savings schemes, which are notified on a quarterly basis, have been slashed by up to 1.1% for the first quarter of 2021-22. This is in line with banks dropping interest rates on fixed deposits.

The new rates will come into effect from 1 April.

Post office time deposit rates across tenures have been reduced by 0.40- 1.1% and will earn in the range of 4.4- 5.3%.

Senior Citizens have also not escaped from the drop in interest rates. For the five-year Senior Citizens Savings Scheme, the interest rate has been reduced steeply by 0.9% to 6.5%.

For the first time interest rate on savings deposits has been reduced by 0.5% to 3.5%, from the existing 4% annually.

The interest on the senior citizens' scheme is paid quarterly.

The steepest fall of 1.1% has been in the one-year term deposit. The new rate will be 4.4%, down from the existing 5.5% interest rate.

Similarly, two-year fixed deposit will fetch 0.5% less at 5%, three-year term deposit rate will slide 0.4% and five- ear term deposit rate will shrink 0.9% to 5.8%.

The girl child savings scheme Sukanya Samriddhi Yojana account will earn 0.7% less at 6.9% during the first quarter of the next financial year.

The annual interest rate on Kisan Vikas Patra (KVP) has fallen 0.7% to 6.2%, from 6.9%.

Earlier, in the April-June quarter of 2020-21, the government had slashed rates of small savings schemes by 70-140 basis points.