Govt. lowers interest rates on small savings schemes; interest on PPF reduced to 8.1%

Every year in the month of March, the Finance Ministry notifies the interest rates on various Small Savings Schemes for the next financial year.

However, as per the Press Release of the Government, dated 16th February, 2016, instead of annual resetting of interest rates for the next financial year, the interest rates now on will be reset a er every quarter based on the G-Sec yields of the previous three months.

Accordingly, interest rates on various Small Savings Schemes for the 1st quarter of 2016-17 have been notified by the Government considering the G-Sec yields for the months of December 2015 to February 2016. The rates of interest on various small savings schemes have been notified as under:

 Interest rate on PPF is reduced to 8.1% from 8.7%.

 Interest rate on KVP is reduced to 7.8% from 8.7%.

 Interest rate on 5-Year NSC is reduced to 8.1% from 8.5%.

 Interest rate on Sukanya Samriddhi Account Scheme is reduced to 8.6% from 9.2%.

 Interest rate on 1-Year Time Deposit is reduced to 7.1% from 8.4%.

 Interest rate on 2-Year Time Deposit is reduced to 7.2% from 8.4%.

 Interest rate on 3-Year Time Deposit is reduced to 7.4% from 8.4%.

 Interest rate on 5-Year Time Deposit is reduced to 7.9% from 8.5%.

 Interest rate on 5-Year Recurring Deposit is reduced to 7.4% from 8.4%.

 Interest rate on 5-Year Senior Citizens Saving Scheme is reduced to 8.6% from 9.3%.

 Interest rate on 5-Year Monthly Income Account Scheme is reduced to 7.8% from 8.4%.

 Interest on Savings Deposit is unchanged at 4%.

The quarterly revision of interest rates will ensure that the interest rates under Small Savings Schemes are more dynamically related to the current market rates, thereby enabling the Banks to move their interest rates in line with current money market rates.