The government on Wednesday slashed interest rates on small savings schemes, including NSC and PPF, by 0.2 percentage point for the January-March period from the rates applicable in the previous quarter, a move that will prompt banks to lower deposit rates. The interest for the five-year Senior Citizens Savings Scheme has been retained at 8.3%.
The finance ministry notification said rates have been reduced across the board for schemes such as National Savings Certificate (NSC), Sukanya Samriddhi Account, Kisan Vikas Patra (KVP) and Public Provident Fund (PPF). However, interest on savings deposits has been retained at 4 percent annually.
As per the notification, PPF and NSC will fetch a lower annual rate of 7.6 percent while KVP will yield 7.3 per cent and mature in 11 months.
The girl child savings scheme Sukanya Samriddhi Account will offer 8.1 percent from existing 8.3 per cent 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.