Interest rate on small savings schemes unchanged for Jan-Mar

January 02, 2017 02:30 pm | Updated 02:30 pm IST - New Delhi

The Government has kept interest rates on small savings schemes like PPF and Kisan Vikas Patra unchanged for the January-March quarter even as banks have started lowering their deposit rates.

Since April last year, interest rates of all small saving schemes have been recalibrated on a quarterly basis. For the January-March quarter, these have been kept unchanged compared with the October-December quarter.

A Finance Ministry notification said investments in the public provident fund (PPF) scheme will continue to fetch an annual interest rate of 8 per cent, the same as 5-year National Savings Certificate.

Kisan Vikas Patra (KVP) investments will continue to yield 7.7 per cent and mature in 112 months.

The one for girl child savings, Sukanya Samriddhi Account Scheme, will continue to give out 8.5 per cent annually, while it will be the same at 8.5 per cent for the 5-year Senior Citizens Savings Scheme. The interest rate on the senior citizens savings scheme is paid quarterly.

A savings deposit will fetch 4 per cent interest annually, while term deposits of 1-5 years will offer 7-7.8 per cent that will be paid quarterly. The 5-year recurring deposit will continue to earn you 7.3 per cent rate.

“On the basis of the decision of the government, interest rates for small savings schemes are to be notified on a quarterly basis,” the ministry said while notifying the interest rates for the fourth quarter of 2016-17 starting from January 1, 2017, and ending on March 31.

While announcing the quarterly setting of interest rates, the Finance Ministry had said the rates of small saving schemes will be linked to government bond yields.

The move is expected to allow banks to pass on policy rate cuts by the central bank — as and when these happen — through lower lending rates. Banks said it was high interest rates on small savings schemes that prohibited them from passing on such reductions to borrowers in a significant way.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.