In a bid to make make the economy more efficient rather than sluggish, the government has slashed the interest rates on small savings including Public Provident Fund (PPF) and Kisan Vikas Patra (KVP). The interest rate cut is in lieu with government’s February 16 decision to revise interest rates on small savings every quarter.
As a result, the interest rates on PPF (Public Provident Fund) scheme will be slashed from current rate of 8.7 percent to 8.1 percent for the period April 1 to June 30. The interest rates on Kisan Vikas Patra (KVP), on the other hand will be slashed from 8.7 percent to 7.8 percent.
The interest rates for the five-year National Savings Certificates will be cut from current 8.5 percent to 8.1 percent starting April 1.
Girl-child saving scheme, Sukanya Samriddhi Account will earn interest rate of 8.6 percent against current rate of 9.2 percent. Senior citizen savings scheme of five year will have interest rate of 8.6 percent as opposed to 9.3 percent.
“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.
Post Office term deposits of one, two and three years currently fetch an interest rate of 8.4 percent. Starting April 1, however, a one year time deposit will earn 7.1 percent, two year time deposit will get 7.2 percent while the three year time deposit will get an interest of 7.4 percent. Five year time deposit will earn 7.9% interest in the first quarter as opposed to current rate of 8.5%. The same on a five-year recurring deposit has been reduced from 8.4% to 7.4%.
The Kisan Vikas Patra currently provides for doubling of principal in 100 months (8 years and 4 months). It will be doubled in 110 months (9 years and 2 months), after the interest rate revision. Moreover, the premature closure of PPF accounts ‘in genuine cases’, like serious ailment or higher education of children will also be permitted with a penalty of 1 percent reduction in interest payable on the whole deposit and only for the accounts having completed five years from the date of opening.
Interest Rates On PPF, Other Small Savings
|Savings Scheme||Old Rate||Revised Rate|
|Public Provident Fund (PPF)||8.7%||8.1%|
|Kisan Vikas Patra (KVP)||8.7%||7.8%|
|Sukanya Samriddhi Account||9.2%||8.6%|
|Senior Citizen Savings Scheme||9.3%||8.6%|
|Post Office Deposit (One Year)||8.4%||7.1%|
|Post Office Deposit (Two Year)||8.4%||7.2%|
|Post Office Deposit (Three Year)||8.4%||7.4%|
|Post Office Deposit (Five Year)||8.5%||7.9%|
|Five Year National Savings Certificates||8.5%||8.1%|
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