Govt cuts interest rates on small saving schemes by 20 bps

The government on Wednesday announced a 20 basis point reduction in interest rates on various small saving schemes like Public Provident Fund, Kisan Vikas Patra and National Savings Certificate for the January-March 2018 quarter, amidst a general trend of falling interest rates.

Accordingly, interest rate on 1-year time deposits has been fixed at 6.6 per cent for the last quarter of fiscal 2017-a8 against 6.8 per cent in the previous quarter, while rate on 2-year time deposits has been reduced to 6.7 per cent, says a notification issued by the Department of Economic Affairs.

However, the interest rate on the five-year senior citizens savings plan has been kept unchanged at 4 per cent.

Investments in the public provident fund scheme will fetch lower annual rate of 7.6 per cent, the same as 5-year National Savings Certificate. The existing rate for these two schemes is 7.8 per cent.

Rates on public provident fund and Sukanya Samriddhi Account have also been cut by 20 basis points to 7.6 per cent and 8.1 per cent, respectively.

Since April 2016, interest rates of all small saving schemes have been linked to government bond yields and are now recalibrated on a quarterly basis.