Government Slashes Interest Rates on Small Saving Schemes

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The central government on Wednesday slashed interest rates on small saving schemes for the first quarter of the next fiscal.

The interest rate on various small saving schemes has been cut in the range of 50-110 basis points from January-March 2021 to April-June 2021, according to a notification by the finance ministry.

One of the sharpest cuts was seen in the term deposit schemes, with interest rate on a one-year time deposit being reduced from 5.5% to 4.4%. The returns on the five-year time deposit will fall from 6.7% in January-March to 5.8% in April-June.

The interest rate on the Public Provident Fund scheme savings have been reduced to 6.4% from 7.1% during this period. With this, the interest rate on PPF stand at a 46-year-low.

From April 1, the interest rate on National Savings Certificate would be 5.9%, down from 6.8% earlier. The returns on Senior Citizen Savings Scheme would be at 6.5% against 7.4% earlier, and on savings deposit it will be 3.5%, compared with 4% at present.

The Sukanya Samriddhi Accoutn Scheme will fetch an interest rate of 6.9%, from earlier 7.6%.

Since the onset of the COVID-19 pandemic, this is the second time that the government has reduced interest rates on these schemes in a year. Interest rates on small saving schemes were last reduced in April-June of 2020, when it was slashed by 70-140 basis points.

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