Small Savings Schemes Rates Unchanged for Last Quarter (January-March) Of Financial Year 2016-17: Interest Rates Slashed
Government has revised the interest rates on popular Small Savings Schemes toeing in line with the decision taken last month (February,’16) to review the interest rates on quarterly basis (instead of annual cycle) from the new Financial Year (April,’16). The decision has been taken to align the small savings interest rates with the relevant market rates of relevant Government Securities. The rates will now be reset every quarter in order to align them with the current market rates. The interest rates on Small Savings Schemes are much higher as compared to rates offered by Banks. The Central Bank (RBI) has 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. RBI had stated that Banks have not been able to pass on the benefits of rate cut to the customers, although the lending rates are going down due to the high deposit rates.
The Government on Friday slashed the deposit rates across all Small Savings Scheme which is reviewed on quarterly basis. The new rates are applicable from 1st October,’16 till 31st March,’16. The deadline for the review has also been announced. The rates will now be determined at par with rates of Government Securities.
Quarter for which rate of interest would be effective
Date on which the revision would be notified
Rate of Interest to be based on FIMMDA month end G-Sec. rate pertaining to
April to June
July to September
October to December
January to March
Revised Deposit Rates on Small Savings Scheme (Click on link below to read more about the Schemes)
Public Provident Fund (PPF): Rates is slashed to 8% from 1st October,’16 to 31st March, ’16. 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 8.0% from 1stOctober,’16 as compared 8.1% at present. The interest will be compounded annually.
Kisan Vikas Patra (KVP): The rates has been slashed to 7.7% from existing 7.8% for the period ending 31st March,’16. The interest is compounded annually.
Sukanya Samriddhi Scheme (SSS): The rates has been slashed 8.5% as compared to existing interest rate of 8.6%.
Senior Citizen Savings Scheme (SCSS): The rates has been slashed to 8.5% from existing interest rate of 8.6%.
Post Office Schemes: Rates has also been slashed on Post Office Term Deposits of 1 year, 2 years, 3 years and 5 years to 7%, 7.1%, 7.3% and 7.8% respectively. Whereas 5 years Recurring Deposit will fetch a return of 7.3% per annum.