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Govt Cuts Interest Rate On Small Savings Schemes By 0.7-1.4% For Apr-June
For the April-June quarter, the government has cut interest rate on number of small savings instruments in the range of 70bps to 140 bps. One basis point is one-hundredth of a percentage point.
The interest rate on these schemes are revised on a quarterly basis depending on the yield on the 10-year benchmark bonds.
After the rate cut, the popular PPF or public provident fund will fetch 7.1%, down 0.8% from the earlier 7.9%.
The rate on NSC has been decreased by 110 bps to 6.8% from the earlier 7.9%, while the rate on KVP or Kisan Vikas Patra stands reduced by 70 bps to 6.9% from 7.6% earlier.
The 5-year recurring deposit at post office will now fetch 5.8% against the earlier 7.2%. Also, on the time deposits, interest rate has been cut by 100bps to 6.7% from 7.7% earlier.
| Small savings instrument | Interest rate in the previous qtr | Interest rate from April-June 2020 |
|---|---|---|
| PPF | 7.9% | 7.1% |
| NSC | 7.9% | 6.8% |
| Kisan Vikas Patra | 7.6%( with maturity in 113 months) | 6.9% (with maturity in 124 months ) |
| 5-year RD | 7.2% | 5.8% |
| 1-year time deposit | 6.9% | 5.5% |
| 2-year time deposit | 6.9% | 5.5% |
| 3-year time deposit | 6.9% | 5.5% |
| 5-year Time deposits | 7.7% | 6.7% |
| Senior citizen savings scheme | 8.6% | 7.4% |
| MIS | 7.6% | 6.6% |
| Sukanya Samriddhi | 8.4% | 7.6% |
Notably, the rate cut comes after a year of pause.
Atanu Chakraborty, Dept. of Economic Affairs Secretary, recently hinted at a rate revision on small savings schemes in the next quarter in line with market rates, the move that will aid faster transmission of key policy rates.
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