New Delhi, June 30: The Finance Ministry has decided to cut interest rates on the Public Provident Fund Scheme and other small savings schemes again. The interest rate cut extends up to 10 basis points or 0.1 per cent. Among the small savings schemes whose rates have been cut are the National Savings Certificate Scheme (NSC) and the Kisan Vikas Patra (KVP).
The rates will be applicable for the second quarter of the current financial year, beginning from July 1, 2017, and extending up to September 30, 2017. After the Finance Ministry’s revisions, the PPF and National Savings Certificate schemes will offer an interest rate of 7.8 per cent, while KVPs will offer a rate of 7.5%. Prior to this rate cut, PPF, NSC and KVP were offering 7.9 percent, 7.9 percent and 7.6 percent respectively.
Earlier, the PPF, NSC and KVP schemes extended an interest rate of 7.9%, 7.9% and 7.6% each. Meanwhile, schemes that extend the highest returns of 8.3 per cent. include the Sukanya Samriddhi Yojana and the Five-Year Senior Citizens Savings Scheme.In the first quarter, the two schemes were offering an interest rate of 8.4 per cent.
Aditi Nayar, Principal Economist, ICRA, is reported by the HBL as having said, “Given the continuing and substantial liquidity surplus, liquidity management measures and rate action by the RBI are likely to emerge as the key drivers of deposit rate cuts in the ongoing year.”
The rates on savings schemes are revised every three by the government. Manoj Nagpal, CEO of Outlook Asia Capital is reported by ET as having said, “Now the formula is to reduce the rates by 10 basis points every quarter.In that context, the real rate of interest offered by small savings schemes is still quite attractive.” A similar revision was initiated by the government in March and the rate cut for all the schemes was 10 basis points.