The government has announced a cut in the interest rates of various small savings schemes for the April-June quarter. These new rates will be applicable from 1 April.
People with accounts in Public Provident Fund (PPF), Kisan Vikas Patra (KVP) and National Savings Certificate (NSC) will earn less after the rates were cut by 70-140 basis points (bps).
One basis point amounts to one-hundredth of a percentage point.
In a circular released on 31 March, the Department of Economic Affairs announced the interest rate cuts. The interest rates of all small savings schemes are readjusted in every quarter and have been linked to government bond yields since 2016.
While interest rates on PPF have been brought down by 80 bps to 7.1 percent, for KVP it has been cut by 70 bps to 6.9 percent. For the NSC, the government has slashed the interest rates by 110 bps to 6.8 percent.
For the Sukanya Samriddhi scheme, a cut of 0.8 percent has been made bringing it to 7.6 percent. In case of the five-year time deposits and five-year recurring deposits, interest rates have been cut by 100 bps and 140 bps to 6.7 percent and 5.8 percent respectively.
The move of slashing the interest rates in small savings schemes was expected after the Reserve Bank of India (RBI) announced a 75 bps cut in its interest rate recently.
Updated Date: Apr 01, 2020 11:48:00 IST