Govt cuts interest rates on PPF & small savings by 0.1%


The new rate will be effective from 1 April 2013

The government on 25 March 2013 has reduced the rate on other small savings schemes with maturity of two years or more by 10 basis points or 0.1% (100 bps is equal to 1%). This includes fixed deposits (FDs), recurring deposits (RDs) and National Savings Certificates (NSCs). The new rate will be effective from 1 April 2013.

An FD with tenure of 1 year will now provide an interest rate of 8.2% per annum against 8.3% earlier. Five-year NSC and 10-year NSC will offer rate of return of 8.5% and 8.9%, respectively from 8.6% and 8.9%. Senior Citizens Savings Scheme (SCSS) will now offer the highest rate of interest at 9.2%.

Interest rate on savings deposit and one-year term deposit remains unchanged at 4% and 8.2%, respectively. The government has also reduced the interest rate on Public Provident Fund (PPF) from 8.8% to 8.7%.

Based on the decisions taken by the government on the recommendations of the Shyamala Gopinath Committee for Comprehensive Review of National Small Savings Fund (NSSF), the interest rates for small saving schemes are to be notified every financial year, before April 1 of that year.

Before the alignment of interest rate on such schemes with government securities in 2011, an interest rate of 8% was offered on NSC.

Scheme

Interest rate 1 Apr 2012

Interest rate  1 Apr 2013

Savings Deposit

4.0

4.0

1 Year Time Deposit

8.2

8.2

2 Year Time Deposit

8.3

8.2

3 Year Time Deposit

8.4

8.3

5 Year Time Deposit

8.5

8.4

5 Year Recurring Deposit

8.4

8.3

5 Year SCSS

9.3

9.2

5 Year MIS

8.5

8.4

5 Year NSC

8.6

8.5

10 Year NSC

8.9

8.8

PPF

8.8

8.7




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