New Delhi: The government has lowered the interest rates on small saving schemes such as the public provident fund (PPF), Kisan Vikas Patra and the Sukanya Samriddhi scheme by 0.1 per cent for the April-June quarter, a move that would prompt banks to cut the deposit rates.
For April-June, these have been lowered by 0.1 per cent across the board, compared to January-March. However, the interest on savings deposits has been retained at 4 per cent annually.
Since April last, ithe nterest rates of all small saving schemes have been recalibrated on a quarterly basis.
A Finance Ministry notification said investments in the PPF scheme will fetch a lower annual rate of 7.9 per cent, the same as 5-year National Savings Certificate. The existing rate for these two schemes is 8 per cent. Kisan Vikas Patra (KVP) investments will yield 7.6 per cent and mature in 112 months.
The one for the girl child savings, the Sukanya Samriddhi Account Scheme, will offer 8.4 per cent annually, from 8.5 per cent at present, while it will be the same at 8.4 per cent for the 5-year Senior Citizens Savings Scheme, the interest rate of ehich is paid quarterly.
Term deposits of 1-5 years will fetch a lower 6.9-7.7 per cent that will be paid quarterly while the 5—year recurring deposit has been pegged lower at 7.2 per cent.
“On the basis of the decision of the government, ithe nterest rates for the small savings schemes are to be notified on a quarterly basis,” the Ministry said while notifying the rates for the fourth quarter of 2016-17 starting from April 1, 2017.
While announcing the quarterly setting of interest rates, the Ministry had said the rates of the small saving schemes would be linked to government bond yields.