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PPF, NSC, other small savings schemes interest rate cut withdrawn

The government on Thursday withdrawn the order which slashed interest rates on Public Provident Fund (PPF) and other small savings schemes for the June quarter.

“Interest rates of small savings schemes of GoI shall continue to be at the rates which existed in the last quarter of 2020-2021, ie, rates that prevailed as of March 2021. Orders issued by oversight shall be withdrawn,” read a tweet from Finance Minister Nirmala Sitharaman.

Interest rates for small savings schemes are notified on a quarterly basis.

The rates of interest on various small savings schemes for the first quarter of the financial year 2021-22 starting from April 1 and ending on June 30, 2021, was revised on Wednesday.

The interest rate for the five-year Senior Citizens Savings Scheme has also been reduced steeply by 0.9 per cent to 6.5 per cent. The interest on the senior citizens’ scheme is paid quarterly.

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

While announcing the quarterly setting of interest rates in 2016, the finance ministry had said that rates of small savings schemes would be linked to government bond yields.

Last month, the Reserve Bank of India (RBI) kept interest rates static for the fourth time in a row at 4 per cent on inflationary concerns.

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