The Union Finance Minister Nirmala Sitharaman has announced that the government has withdrew its order of cutting interest rates for small saving schemes.
“Interest rates of small savings schemes of GoI shall continue to be at the rates which existed in the last quarter of 2020-2021, ie, rates that prevailed as of March 2021. Orders issued by oversight shall be withdrawn,” tweeted the finance minister.
The interests rate for small saving schemes including Public Provident Fund (PPC) and National Savings Certificate (NSC) were cut by the government up to 1.1 per cent for the first quarter of 2021-2022 in parallel with the falling fixed deposit rates of banks.
The rates on PPF and NSC were cut by 0.7 per cent to 6.4 per cent and from 6.8 per cent to 5.9 percent respectively.
After this cut the interest rate for PPF went to its lowest since 1974. The PPF interest rate between August 1974 to March 1975 was at 7 per cent and before that it was at 5.8 per cent.
These interest rates for small saving schemes are notified on quarterly basis.
The steepest fall of 1.1 per cent was effected in the one-year term deposit. The new rate stood at 4.4 per cent from the earlier 5.5 per cent.
While announcing the quarterly setting of interest rates in 2016, the finance ministry had said that rates of small savings schemes would be linked to government bond yields.
Last month, the Reserve Bank of India (RBI) kept interest rates static for the fourth time in a row at 4 per cent on inflationary concerns.
