New Delhi: Banks may soon turn more friendly lenders by paring lending rates and reducing your EMI burden.
The situation will be the impact of government’s decision to reduce interest rates on small savings products such as public provident fund and National Savings Certificate over the next few days.
The new formula will see small savings rates linked to returns on government securities of comparable maturity, with the reduction expected to be up to 50 basis points.
Apart from reducing EMI burden, this will also impact returns on your bank fixed deposits.
The new rates are expected to be notified over the next few days with the government set to announce quarterly revision instead of an annual reset, which is the norm currently, sources said.
The Reserve Bank of India and banks have been seeking a reduction in small savings rates, arguing that PPF and other products offered higher returns when compared with fixed deposits.