For the April-June quarter, the government has cut interest rate on number of small savings instruments in the range of 70bps to 140 bps. One basis point is one-hundredth of a percentage point.
The interest rate on these schemes are revised on a quarterly basis depending on the yield on the 10-year benchmark bonds.
After the rate cut, the popular PPF or public provident fund will fetch 7.1%, down 0.8% from the earlier 7.9%.
The rate on NSC has been decreased by 110 bps to 6.8% from the earlier 7.9%, while the rate on KVP or Kisan Vikas Patra stands reduced by 70 bps to 6.9% from 7.6% earlier.
The 5-year recurring deposit at post office will now fetch 5.8% against the earlier 7.2%. Also, on the time deposits, interest rate has been cut by 100bps to 6.7% from 7.7% earlier.
|Small savings instrument||Interest rate in the previous qtr||Interest rate from April-June 2020|
|Kisan Vikas Patra||7.6%( with maturity in 113 months)||6.9% (with maturity in 124 months )|
|1-year time deposit||6.9%||5.5%|
|2-year time deposit||6.9%||5.5%|
|3-year time deposit||6.9%||5.5%|
|5-year Time deposits||7.7%||6.7%|
|Senior citizen savings scheme||8.6%||7.4%|
Notably, the rate cut comes after a year of pause.
Atanu Chakraborty, Dept. of Economic Affairs Secretary, recently hinted at a rate revision on small savings schemes in the next quarter in line with market rates, the move that will aid faster transmission of key policy rates.