In comparison to the April-June quarter, the government on Friday announced to reduce the interest rate on small saving schemes like PPF, Kisan Vikas Patra and Sukanya Samriddhi by 0.1 per cent for the July-September quarter, a move that would lead bank to deduce the deposit rates. However, the interest on saving deposits has not been changed and it remains at 4 per cent annually. Since April last year, the government on a quarterly basis has recalibrated interest rates of all small saving schemes.
A notification from the finance ministry said investments in the public provident fund (PPF) scheme will fetch lower annual rate of 7.8 per cent. The Kisan Vikas Patra (KVP) investments will yield 7.5 per cent and mature in 115 months. The one for girl child savings, Sukanya Samriddhi Account Scheme, will offer 8.3 per cent annually, from 8.4 per cent at present.
The investment on 5-year Senior Citizens Savings Scheme will yield 8.3 per cent. Intrest rate on the senior citizens scheme is paid quarterly. Term deposits of 1-5 years will fetch a lower 6.8-7.6 per cent however the 5-year recurring deposit has been pegged lower at 7.1 per cent.
The ministry while notifying the rates for second quarter of the financial year 2017-18, said, “On the basis of the decision of the government, interest rates for small savings schemes are to be notified on a quarterly basis.” On announcement of the quarterly setting of interest rates, the ministry said the rates of small saving schemes would be linked to government bond yields.
with inputs from PTI