Updated: Jan 02, 2017, 01.36 PM IST
NEW DELHI: Government has kept interest rates on small savings schemes like PPF and Kisan Vikas Patra unchanged for the January-March quarter even as banks have started lowering their deposit rates.
Since April last year, interest rates of all
small saving schemes have been recalibrated on a quarterly basis. For
the January-March quarter, these have been kept unchanged compared with
the October-December quarter.
A finance ministry notification said investments in public provident fund (PPF) scheme will continue to fetch an annual interest rate of 8 per cent, the same as 5-year National Savings Certificate.
Kisan Vikas Patra (KVP) investments will continue to yield 7.7 per cent and mature in 112 months.
The one for girl child savings, Sukanya Samriddhi
Account Scheme, will continue to give out 8.5 per cent annually while
it will be the same as 8.5 per cent for the 5-year Senior Citizens
Savings Scheme. Interest rate on senior citizens savings scheme is paid
quarterly.
A savings deposit will fetch 4 per cent
interest annually while term deposits of 1-5 years will offer 7-7.8 per
cent that will be paid quarterly. The 5-year recurring deposit will
continue to earn you 7.3 per cent rate.
"On the basis of the decision of the
government, interest rates for small savings schemes are to be notified
on a quarterly basis," the ministry said while notifying the interest
rates for the fourth quarter of 2016-17 starting from January 1, 2017,
and ending on March 31.
While announcing the quarterly setting of
interest rates, the finance ministry had said the rates of small saving
schemes will be linked to government bond yields.
The move is expected to allow banks to pass on
policy rate cuts by the central bank -- as and when these happen --
through lower lending rates. Banks said it was high interest rates on
small savings schemes that prohibited them from passing on such
reduction to borrowers in a significant way.
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