Small savings schemes rates remain unchanged for September quarter

The finance ministry has retained the interest rate on small savings schemes for the September quarter.

The scheme will continue to fetch small investors better rates than other fixed income avenues such as bank fixed deposits (FDs).

For example, the five-year fixed deposit under Post Office Savings Scheme offers a 6.7 per cent interest rate. Top banks in the country offer 5.4-5.5 per cent interest rates on a fixed deposit of the same tenure.

Many were keenly waiting for the announcement after the events that occurred last quarter. Towards March-end, the government had announced a cut in small savings scheme rates — the rates for Public Provident Fund (PPF) were reduced by 0.7 per cent to 6.4 per cent, and for National Savings Certificate (NSC) were revised downwards by 0.9 per cent.

However, the next day, the finance minister said that earlier notification on rate cuts was an “oversight”, and the rates remain unchanged.

“Interest rates of small savings schemes of GoI (Government of India) 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 Orders issued by oversight shall be withdrawn,” Finance Minister Nirmala Sitharaman had posted on Twitter.

The events happened around the time some states (including West Bengal, Assam, Tamil Nadu and Kerala) were either going for polls or elections were underway.

Interest rates on small savings schemes have remained unchanged since April 1, 2020, even though rates have been falling on other traditional fixed income products like bank and company FDs.

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