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DNA Explainer: Govt keeps small savings interest rates unchanged, what it means

Public Provident Fund (PPF) and National Savings Certificate (NSC) will continue to carry an annual interest rate of 7.1% and 6.8%, respectively.

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DNA Explainer: Govt keeps small savings interest rates unchanged, what it means
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Amid the COVID-19 pandemic, the government on Wednesday kept interest rates on small savings schemes, including NSC and PPF, unchanged for the second quarter of 2021-22. Interest rates for small savings schemes are notified on a quarterly basis.

Public Provident Fund (PPF) and National Savings Certificate (NSC) will continue to carry an annual interest rate of 7.1% and 6.8%, respectively, in the second quarter as well. The interest rate on savings deposits will continue to be 4% per annum.

This is the fifth quarter (ending September 30, 2021) in a row that the finance ministry has retained the interest rate on various small savings schemes. An extension of three months for a tax deduction for people investing in residential houses has been granted.

Big tax reliefs announced 

The Public Provident Fund (PPF) and National Savings Certificate (NSC) will continue to carry an annual interest rate of 7.1% and 6.8%, respectively.

The small savings schemes will continue to fetch small investors better rates than other fixed income avenues such as bank fixed deposits (FDs).

Earlier on 1 April, the Centre had swiftly revoked a steep interest rate cut of up to 1.1% for the first quarter on small savings schemes, citing oversight.

As a result, the first quarter rates were retained at the level of the fourth quarter of the last fiscal year. The cut was touted as the steepest cut in many decades.

One-year term deposit scheme will continue to earn an interest rate of 5.5% during the second quarter of the current financial year.

The girl child savings scheme Sukanya Samriddhi Yojana account will earn 7.6%.

The interest rate on the five-year senior citizens' savings scheme would be kept at 7.4%.

The interest rate on savings deposits will continue to be 4% per annum.

Term deposits of one to five years will fetch an interest rate in the range of 5.5-6.7%, to be paid quarterly.

The interest rate on five-year recurring deposits will earn a higher interest of 5.8%.

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