AGENCIES, New Delhi: The central government on Tuesday slashed interest rates on small savings schemes such as Senior Citizen Savings, Public Provident Fund (PPF), National Savings Certificate (NSC), Kisan Vikas Patra, Sukanya Samriddhi Accounts and Recurring Deposits in the range of 0.7% to 1.4% for the first quarter of 2020-21.
The government has reduced interest rate on Senior Citizen Savings scheme from 8.6% to 7.4%, which will be effective from April 1, 2020, till the end of the first quarter on June 30, a finance ministry notification said.
The interest rate of PPF has been reduced from 7.9% in the last quarter of previous financial year to 7.1% from for three months, it said. However, the Employees’ Provident Fund Organisation (EPFO), which is governed by a board of trustees, had on March 6, declared 8.5% interest rate for financial year 2019-20. Interest rates for small savings schemes are notified on a quarterly basis.
The new interest rate for the girl child saving scheme Sukanya Samriddhi Account scheme in the first quarter of current financial year will now be 7.6% from 8.4% earlier.
Interest rates on NSC have been reduced from 7.9% to 6.8% and Kisan Vikas Patra from 7.6% to 6.9%, the order said. “This has the approval of finance minister,” the notification said.
After the reduction in interest rates, term deposits of 1-3 years will now fetch an interest rate of 5.5% from 6.9% applicable in the previous quarter, a reduction of 1.4%, the notification said.
While the five-year term deposit will earn 6.7% from the current rate of 7.7%, the interest rate on five-year recurring deposit has been reduced sharply by 1.4%. The five-year recurring deposit will now fetch 5.8% interest instead of 7.2% in the previous quarter, it said.
The interest rate on savings deposit has, however, been kept unchanged at 4%.