PPF Rates Cut: Govt Reduces Interest Rates On Small Savings Schemes, Changes To Be Effective From April 1

The rates of interest on various small savings schemes for the first quarter of FY 2021-22, have been revised

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New Delhi: The government has announced its decision to cut interest rates on small savings schemes, including NSC and PPF, by up to 1.1 percent for the first quarter of 2021-22 inline with falling fixed deposit rates of banks.

On Public Provident Fund (PPF), the interest rate has been reduced by 0.7 percent to 6.4 percent and as for National Savings Certificate (NSC), it is 0.9 percent less at 5.9 percent.

The Interest rates for small savings schemes are notified on a quarterly basis.

The rates of interest on various small savings schemes for the first quarter of the financial year 2021-22 starting from April 1 and ending on June 30, 2021, have been revised, the finance ministry stated in a notification.

It is for the first time that interest rates on savings deposits have been reduced by 0.5 percent to 3.5 percent from the existing 4 percent annually.

The steepest fall is for the one-year term deposit where there is a reduction of 1.1 percent. The new rate will be 4.4 percent as compared to 5.5 percent at the moment.

The finance ministry, while announcing the quarterly setting of interest rates in 2016, had said that rates of small savings schemes would be linked to government bond yields.

The Reserve Bank of India (RBI) had last month kept interest rates static for the fourth time in a row at 4 percent on concerns of inflation.