Government cuts interest rate on small savings schemes by 0.1%

The Government has decided to reduce interest rates on the small saving schemes including National Savings Certificate (NSC) and Public Provident Fund(PPF) by 0.1% for the second quarter of Financial Year (FY) 2019-20.

As the Reserve Bank of India (RBI) has reduced three times its benchmark policy rate in last one year, the apex bank decided to soften the interest rates in the banking sector also.

Except for the interest rate on saving deposits which has been retained at 4% per annum, rates on all other saving schemes have been by 0.1% for the September quarter.

"On the basis of the decision of the government, interest rates for small savings schemes are to be notified on a quarterly basis," the Finance Ministry said while notifying the rates for the second quarter of financial year 2019-20.

Public Provident Fund (PPF) and National Savings Certificate (NSC) will fetch annual interest rate of 7.9% from the existing rate of 8%, while Kisan Vikas Patra (KVP) will yield 7.6% with maturity of 113 months.

At present, interest rate on KVP is 7.7% and maturity is 112 months. The girl child savings scheme Sukanya Samriddhi Account will fetch a lower return of 8.4% from 8.5%.

Term deposits of 1-3 years will fetch interest rate of 6.9%, to be paid quarterly, while the five-year quarterly pegged at 7.7% and for recurring 7.2% from existing rate of 7.3%.

Interest rate for the five-year Senior Citizens Savings Scheme will now fetch a lower rate of interest at 8.6% from 8.7%. 

(With inputs from PTI)