Small Savings Schemes’ Interest Rates Lowered By 20 Basis Points

Interest rates on various small savings schemes like Public Provident Fund, Kisan Vikas Patra and National Savings Certificate have been reduced by 20 basis points for January-March 2018. The move could prompt banks to lower their deposit rates.

Interest rate on 1-year time deposits has been lowered to 6.6 percent from 6.8 percent in the previous quarter, while the rate on 2-year time deposits has been cut by 20 basis points to 6.7 percent on quarter, said a notification from the Department of Economic Affairs. One basis point is one-hundredth of a percentage point.

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

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

Rates on Public Provident Fund and Sukanya Samriddhi Account have also been cut by 20 basis points each to 7.6 percent and 8.1 percent, 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.