The government has cut the interest rates on a host of small saving schemes including the popular NSC, PPF, Sukanya Samriddhi Account and Kissan Vikas Patra. This would be for the forthcoming qaurter January to March 2018.
The girl child savings scheme Sukanya Samriddhi Account will offer 8.1 percent from existing 8.3 percent annually.
Term deposits of 1-5 years will fetch a lower interest rate of 6.6-7.4 percent, to be paid quarterly, while the five-year recurring deposit is pegged at 6.9 percent.
In a good move, interest rates on the Senior Saving Scheme has been retained at 8.30 per cent. Interest rates on the various small saving schemes are linked to the government bond prices.
However, analysts expect the subsequent quarters to see a further rise in interest rates in small saving schemes, given that bond yields have been trending upwards. In fact, the government has indicated a further borrowing of Rs 50,000 crores, which is expected to push bond yields higher.