Small Savings Schemes Interest Rates Revised For 2nd Quarter (July-September) Of Financial Year 2017-18
Government has revised the interest rates on popular Small Savings Schemes for the 2nd Quarter of the Current Financial Year (2017-18). Last Year, Government had decided to align the small savings interest rates with the relevant market rates of Government Securities. The rates are now recalibrated every quarter in order to maintain it at par with the current market rates. The interest rates on Small Savings Schemes are slightly higher as compared to rates offered by Banks. The Central Bank (RBI) had been clamoring for revision in rates as it is leading to distortion in rate structure. Government is trying to provide a level playing field to the Banks by aligning the deposit rates to the market rates. The slashing of rates will bring disappointment among people as it will lower return on some of the popular investment schemes. The rate cut announced for this quarter is of 0.1%.The rates have been falling rather frequently in the last few quarters. Despite the rate cuts, investment in Public Provident Fund (PPF) and other investment schemes remains attractive when compared with other fixed return instruments. In my opinion, Individuals should look at other lucrative investment options as Mutual Funds and Bonds.
The Government slashed the deposit rates across all Small Savings Scheme which is reviewed on quarterly basis. The new rates are applicable from 1st July,’17 till 30th September,’17. The rates will now be determined at par with rates of Government Securities.
Revised Deposit Rates on Small Savings Scheme (Click on link below to read more about the Schemes)
Public Provident Fund (PPF): Rates have slashed to 7.8% from 1st July,’17 till 30th September,’17. Government has also permitted premature closure of PPF account in genuine cases, such as serious ailment, higher education of children, etc applicable to accounts which have completed 5 years from the date of opening. However, a penalty of 1% reduction in interest payable on whole deposit is imposed in case of premature withdrawal.
National Savings Certificate (NSC): The 5 year NSC will earn an interest of 7.8% from 1st July,’17 as compared 7.9% earned previously. The interest will be compounded annually.
Kisan Vikas Patra (KVP): The rates have been slashed to 7.5% from existing 7.6% for the Quarter ending 30th June,’17. The interest is compounded annually.
Sukanya Samriddhi Scheme (SSS): The rates have been slashed 8.3% as compared to existing interest rate of 8.4%.
Senior Citizen Savings Scheme (SCSS): The rates have been slashed to 8.3% from existing interest rate of 8.4%.
Post Office Schemes: Rates have also been slashed on Post Office Term Deposits of 1 year, 2 years, 3 years, 5 years to 6.8%, 6.9%, 7.1% and 7.6% respectively. Monthly Income Scheme (MIS) will also earn an interest of 7.6%. However, the Savings deposit will continue to fetch returns at the rate of 4%.