Govt Slashes Interest Rates on Small Savings!
The Govt, continuing with its earlier annoucement of aligning interest rates on small savings with market rates, has slashed the interest rates on all small savings schemes, including Public Provident Fund, by 60 basis points, and Kisan Vikas Patra, by 90 basis points.
The 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 while, the interest rate on KVP will be cut to 7.8 per cent from 8.7 per cent.The popular five-Year National Savings Certificates will earn an interest rate of 8.1 per cent from April 1 as against 8.5 per cent, at present.A five-year Monthly Income Account will fetch 7.8 per cent as opposed to 8.4 per cent now. Girl-child saving scheme, Sukanya Samriddhi Account will see interest rate of 8.6 per cent as against 9.2 per cent.
The new interest rates for 12 small savings schemes will be effective for the period April 1, 2016 to June 30, 2016. this is a departure from the past and now onwards, the rates will be reset every quarter, to be better linked with government securities of comparable maturity.
Its expected that the latest round of tax reforms will reduce rigidities in interest rate regime in India and will help create conducive environment for the Reserve Bank of India to ease monetary policy rates. this will further allow banks transmit rate cuts to customers.