After a satisfying Budget 2016, the Government has surprisingly hit the middle class by reducing the interest rate on all saving scheme like PPF, Kisan Vikas Patra, NSCs etc. This move is aimed to align interest on small savings with market rates.

The government is now moving on revising interest rates on such schemes every quarter, the new rates, therefore, will be applicable from April 1 to June 30.

 

Major highlights of changes in interest rate of Saving Scheme:

• Interest rate on Public Provident Fund (PPF) scheme will be cut to 8.1 per cent for the period April 1 to June 30, from 8.7 per cent, at present.
• Rate on Kisan Vikas Patra is being lowered to 7.8 per cent from 8.7 per cent.
• Interest rates on Sukanya Samriddhi Account Scheme, which was launched by Prime Minister Narendra Modi especially for the girl child, too are being reduced to 8.6 per cent from 9.2 per cent.
• Interest rate payable on 1 year time deposit has been slashed to 7.1 per cent from 8.4 per cent.
• Interest rate on five-year Senior Citizen Savings Scheme has also been reduced to 8.6 per cent from 9.3 per cent.
• The popular five-Year National Savings Certificates will earn an interest rate of 8.1 per cent as against 8.5 per cent.
• A five-year Monthly Income Account will fetch 7.8 per cent as opposed to 8.4 per cent now.

 

The government had on February 16 announced moving small saving interest rates closer to market rates, but said that the interest rate and the spread that some of these schemes enjoy will remain untouched. However, on Friday the government slashed rates on all schemes.

 

However, the Center kept interest rate on Postal Savings Deposits unchanged at 4%. “On the basis of the decisions of the government, interest rates for small savings schemes are to be notified on quarterly basis,” the order said announcing the rates for the first quarter of fiscal 2016-17.

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