The government on Friday cut interest rate on small savings schemes, including National Savings Certificate and Public Provident Fund, by 10 basis points for the July-September quarter.
PPF and NSC will now fetch annual interest rate of 7.9 percent from the existing rate of 8 percent, while Kisan Vikas Patra will yield 7.6 percent with maturity of 113 months. At present, KVP interest rate is 7.7 percent and maturity is 112 months. The Sukanya Samriddhi Yojana will fetch a lower return of 8.4 percent from 8.5 percent.
The small savings rate cut is aimed at matching the softening of interest rates in the banking sector since the Reserve Bank of India cut its benchmark repo rate three times during the year.
Barring savings deposit rates, which has been retained at 4 percent annually, rate on all other small savings schemes has been slashed by 10 basis points.
"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 July-September quarter.
Term deposits of 1-3 years will fetch interest rate of 6.9 percent, to be paid quarterly, while the five-year quarterly pegged at 7.7 percent and for recurring 7.2 percent from existing rate of 7.3 percent.
Interest rate for the five-year Senior Citizens Savings Scheme will now fetch a lower rate of interest at 8.6 percent from 8.7 percent.
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