Investors in small savings schemes were in for a rude shock on Tuesday when the central government announced a steep in interest rates offered by such instruments for the April-June quarter – mainly to bring them in line with the falling interest rates across the financial system. Starting Wednesday, small savings schemes like Public Provident Fund (PPF), National Savings Certificate (NSC), Kisan Vikas Patra (KVP), Post Office schemes will fetch 70-140 basis points lower interest rates when compared with the previous quarter. Check out the new rates here:
PPF: For the April-June 2020 quarter, 15-year Public Provident Fund scheme will fetch an annual interest rate of 7.1% (compounded annually) as compared to 7.9% earlier.
NSC: Interest rate on the National Savings Certificate (NSC), a government-backed five-year small savings scheme, has been slashed 110 basis points to 6.8% from 7.9% earlier. The amount is compounded annually and paid on maturity.
KVP: Kisan Vikas Patra (KVP) will now yield 6.9% (compounded annually), down 70 bps from 7.6% earlier, with maturity of 124 months.
Post office term deposits: Post office term deposits of 1-3 years will fetch interest rate of 5.5%, to be paid quarterly, down by a sharp 140 basis points from 6.9% offered earlier. The 5-year deposit rate now stands revised to 6.7% from 7.7%. The 5-year recurring deposits will return 5.8% compared with 7.2% earlier.
Post Office Monthly Income Scheme: The five-year Post Office Monthly Income Scheme (MIS), where interest is paid out monthly, will fetch 6.6% as compared to 7.6% earlier.
Senior Citizens Savings Scheme: Interest rate for the five-year Senior Citizens Savings Scheme has been cut 120 bps to 7.4% compared with 8.6% earlier. The interest payout continues to be on a quarterly basis.
Sukanya Samriddhi Scheme: The girl child savings scheme Sukanya Samriddhi Yojana Account will now fetch 7.6% (compounded annually), down 80 bps from 8.4% earlier – the highest rate among small savings schemes.
Savings deposit: The interest rate on savings deposit has been retained at 4%.