PPF, post office savings rates cut by 10 bps to 8.7 per cent

The government today announced a marginal reduction in interest rates on small saving schemes such as public provident fund (PPF) scheme and the post office saving scheme by 10 basis points, in tune with its low interest rate policy.

Effective 1 April 2013, savings with public provident fund (PPF) will carry an interest of 8.7 per cent against the current year's 8.8 per cent, according to a finance ministry statement.

The government's decision to reduce interest rates on small savings is based on the recommendations of the Shyamala Gopinath Committee, which carried out a comprehensive review of the National Small Savings Fund (NSSF).

The interest rates for small saving schemes are notified every financial year, before 1 April of that year.

Accordingly, the government has announced the rate of interest on various small savings schemes for the financial year 2013-14 effective 1 April 2013.  

The interest is calculated on the basis of the compounding built-in in the schemes.

Interest rate on savings deposit schemes and on fixed deposit of up to one year run by post offices, however, has been kept unchanged at 4 per cent and 8.2 per cent, respectively.

• The rate of interest on the 5-year Monthly Income Schemes (MIS) has been reduced to 8.4 per cent from the existing 8.5 per cent.
  
• The National Savings Certificates (NSC) having maturity of five and 10 years will now attract interest rates of 8.5 per cent and 8.8 per cent, respectively.
  
• The rate for senior citizens savings scheme (SCSS) will now stand lower at 9.2 per cent, against the current year's 9.3 per cent.
  
• The revised interest rates, which would be applicable for the entire 2013-14 fiscal, will affect millions of small savers and PPF account holders.