- Narendra Modi Government slashes interest rates up to 1.1% on small savings schemes, 6.4% on PPF ( Public Provident Fund), and 5.6% on NSC (National Savings Certificate).
- This decision was made by the Ministry of Finance in the form of an announcement on Wednesday during the first quarter of the financial year 2021-2022.
- The announcement was basically made by the Union Finance Minister Nirmala Sitharaman and according to her, there will be slashing/ sharp cutting on the interest rates upon the small saving schemes, PPF as well as NSC. These rates happened to stay unchanged for the last three quarters.
- Since the year 1974, the interest on Public Provident Fund (PPF) scheme was never as below as 7 per cent. It was recorded with 7.1 per cent during the January-March period, but for the first time since 1974, the PPF is observed below the margin of 7 per cent that is, it is the April-June quarter is recorded with 6.4 per cent.
- Under the same condition, it is for the very first time that the interest rate of the savings deposit has been brought down to 0.5 per cent from 3.5 to 4.0 per cent annually.
- Having said that the Modi Government has cut down the rate of interests upon various schemes, the deduction on Small Savings Schemes was observed by up to 1.1 Per Cent.
- Interest rates for small savings schemes are generally notified on a quarterly basis. Therefore, the interest rate on various small saving schemes for the first quarter of the financial year 2021-22 will begin from the first of April, 2021 and shall end on June 30th, 2021.
- A steep reduction has also been seen on the five-year senior citizens savings scheme from 6.5 per cent down to 0.9 per cent that is paid quarterly.
- The steepest fall is affected to the one-year term deposit with an interest reduction of about 1.1 per cent. The new rate will be 4.4 per cent as compared to 5.5 per cent at the moment. Similarly, another steepest fall was affected to two-year fixed deposit with 0.5 per cent interest rate. willthree-year term deposit rate will be down by 0.4 per cent and five- year term deposit rate will be lower by 0.9 per cent at 5.8 per cent.
- The girl child savings scheme Sukanya Samriddhi Yojana account will offer 0.7 per cent lower rate at 6.9 per cent rate during the first quarter of the next fiscal.
- Meanwhile, the annual interest rate on Kisan Vikas Patra (KVP) has been reduced by 0.7 per cent to 6.2 per cent from 6.9 per cent.
- While announcing the quarterly setting of interest rates in 2016, the finance ministry announced about the possible rates of small savings schemes linking to the government bond yields.
- This is henceforth, the fourth time in a row when the Reserve Bank of India (RBI) statically put forward the interest rates at an inflationary concern of 4 per cent.
Revision of Interest rates for Small Saving schemes
|Instruments||Rates of interest from 01.01.2021 to 31.03.2021||Rates of interest from 01.04.2021 to 30.06.2021||Compounding Frequency*|
|1 year time deposit||5.5||4.4||Quarterly|
|2-year time deposit||5.5||5.0||Quarterly|
|3-year time deposit||5.5||5.1||Quarterly|
|5-year time deposit||6.7||5.8||Quarterly|
|5-year recurring deposit||5.8||5.3||Quarterly|
|Senior Citizen Savings Schemes||7.4||6.5||Quarterly and paid|
|Monthly Income Account||6.6||5.7||Monthly and paid|
|National Savings Certificate||6.8||5.9||Annually|
|Public Provident Fund Scheme||7.1||6.4||Annually|
|Kisan Vikas Patra||6.9 (will mature in 124 months)||6.2 (will mature in 138 months)||Annually|
|Sukanya Samriddhi Account Scheme||7.6||6.9||Annually|