The government on Thursday decided to withdraw interest rate cut order on small savings schemes.
“Interest rates of small savings schemes of GoI (government of India) shall continue to be at the rates which existed in the last quarter of 2020-2021, ie, rates that prevailed as of March 2021. Orders issued by oversight shall be withdrawn,” Union finance minister Nirmala Sitharaman wrote on Twitter.
The Centre had slashed interest rates on small savings schemes, such as post office deposits and public provident fund, by up to 110 basis points, dealing a fresh blow to savers seeking safety.
The rate of interest on the public provident fund was cut to 6.4 percent, its lowest since 1974, from 7.1 percent
The steepest fall of 1.1 percent was effected in the one-year term deposit. The new rate was brought down to 4.4 percent as compared to 5.5 percent.
Interest rates for small savings schemes are notified on a quarterly basis
Interest rates on small savings schemes
|
Instruments |
Rates | Compounding frequency |
| Savings deposit | 4.0% |
Annually |
|
1-year |
5.5% | Quarterly |
| 2-year | 5.5% |
Quarterly |
|
3-year |
5.5% | Quarterly |
| 5-year | 6.7% |
Quarterly |
|
5-year Recurring Deposit |
5.8% | Quarterly |
| Senior Citizens Saving Scheme | 7.4% |
Quarterly and paid |
|
Monthly income account |
6.6% | Monthly and paid |
| National Savings Certificate | 6.8% |
Annually |
|
PPF |
7.1% | Annually |
| Kisan Vikas Patra | 6.9% |
Annually |
|
Sukanya Samriddhi Account Scheme |
7.6% |
Annually |
Source: *Kisan Vikas Patra’s maturity has been revised from 124 months to 138 months. (Finance Ministry)
While announcing the quarterly setting of interest rates in 2016, the finance ministry had said that rates of small savings schemes would be linked to government bond yields.
Last month, the Reserve Bank of India (RBI) kept interest rates static for the fourth time in a row at 4 percent on inflationary concerns.