The government on Friday slashed interest rates on small-savings schemes, including the Public Provident Fund and Kisan Vikas Patra.
The decision is aimed at aligning these administered interest rates closer to the market rates. The new rates will come into effect on April 1 and will be valid till June 30. After the decision taken last month to revise the interest rates on small savings every quarter, the rate under the Public Provident Fund scheme will be cut to 8.1 per cent for the period from April 1 to June 30 from 8.7 per cent, said a Finance Ministry order.
While the interest rate on the KVP will be cut to 7.8 per cent from 8.7 per cent, that on post office savings is retained at 4 per cent. The rates on term deposits of durations varying from one to five years have been cut.
The five-year National Savings Certificates will earn interest at the rate of 8.1 per cent as against 8.5 per cent now. A five-year Monthly Income Account will fetch 7.8 per cent as opposed to 8.4 per cent now. The girl-child saving scheme, Sukanya Samriddhi Account, will have an interest rate of 8.6 per cent as against 9.2 per cent. The senior citizen savings scheme of five years will earn 8.6 per cent compared with 9.3 per cent.
The rates on the post office term deposits are being cut from 8.4 per cent to 7.1 per cent for one-year time deposits, 7.2 per cent for two-year time deposits and 7.4 per cent for three-year time deposits.
The rate for the five-year time deposit is being reduced to 7.9 per cent from 8.5 per cent. For five-year recurring deposits, the rate has been slashed to 7.4 per cent from 8.4 per cent.