The government has kept interest rates on small savings schemes like PPF and Kisan Vikas Patra unchanged for the January-March quarter even as banks have started lowering their deposit rates. Since April last year, interest rates of all small saving schemes have been recalibrated on a quarterly basis.

For the January-March quarter, these have been kept unchanged compared with the October-December quarter. A finance ministry notification said investments in public provident fund (PPF) scheme will continue to fetch an annual interest rate of 8 per cent, the same as 5-year National Savings Certificate. Kisan Vikas Patra (KVP) investments will continue to yield 7.7 per cent and mature in 112 months, reports PTI.

The one for girl child savings, Sukanya Samriddhi Account Scheme, will continue to give out 8.5 per cent annually while it will be the same as 8.5 per cent for the 5-year Senior Citizens Savings Scheme. The interest rate on senior citizens savings scheme is paid quarterly. A savings deposit will fetch 4 per cent interest annually while term deposits of 1-5 years will offer 7-7.8 per cent that will be paid quarterly. The 5-year recurring deposit will continue to earn you 7.3 per cent rate. "On the basis of the decision of the government, interest rates for small savings schemes are to be notified on a quarterly basis," the ministry told PTI while notifying the interest rates for the fourth quarter of 2016-17 starting from January 1, 2017, and ending on March 31.

While announcing the quarterly setting of interest rates, the finance ministry had said the rates of small saving schemes will be linked to government bond yields. The move is expected to allow banks to pass on policy rate cuts by the central bank -- as and when these happen -- through lower lending rates. Banks said it was high-interest rates on small savings schemes that prohibited them from passing on such reduction to borrowers in a significant way.

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