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Government to withdraw cut in interest on small savings: Finance Minister

Finance Minister Nirmala Sitharaman on Thursday said the government will withdraw orders to cut the interest rate on small savings schemes and assured to restore the rates to the last quarter of the financial year ended March 31.

The Finance Ministry on Wednesday had reduced the interest rate by up to 1.1 percent across various small savings schemes including National Savings Certificates (NSC) and Public Provident Fund (PPF).

“Interest rates of small savings schemes of GoI 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 Orders issued by oversight shall be withdrawn,” Sitharaman said in an early morning tweet.

The interest rate on Public Provident Fund (PPF) was reduced by 0.7 percent to 6.4 percent while National Savings Certificate (NSC) was to earn 0.9 percent less at 5.9 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.

Once restored, PPF and NSC will carry an annual interest rate of 7.1 percent and 6.8 percent, respectively.

One-year term deposit scheme to earn a higher interest rate of 5.5 percent during the first quarter of the current fiscal while the girl child savings scheme Sukanya Samriddhi Yojana account will earn 7.6 percent as against the reduced rate of 6.9 percent.

Accordingly, the interest rate for the five-year senior citizens’ savings scheme would be retained at 7.4 percent. The interest on the senior citizens’ scheme is paid quarterly.

The interest rate on savings deposits will be restored at 4 percent annually from the reduced rate of 3.5 percent.

Term deposits of one to five years will fetch interest rate in the range of 5.5-6.7 percent, to be paid quarterly, while the interest rate on five-year recurring deposits will earn a higher interest of 5.8 percent as against the reduced 5.3 percent.

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