The Centre has reduced the interest rates on public provident fund (PPF) and other small saving schemes including national savings certificate (NSC) for first quarter of financial year 2021 with effect from April 1.
The Union finance ministry has issued a notification in this regard.
“In exercise of the powers conferred by Rule 9(1) of the Government Savings Promotion General Rules, 2018 the rates of interest on various small savings schemes for the Q1 of FY 2021-22 have been revised,” the Union finance ministry said in its notification.
As per the notification, the interest rates of PPF have been reduced from 7.1% to 6.4% while the interest rate on NSC has been reduced to 5.9% from 6.8%.
According to a report, the new interest rate on PPF will be the lowest since 1974.
In between August 1974 and March 1975, the interest rate on PPF was 7% and prior to that the interest rate was 5.8%.
The girl child savings scheme Sukanya Samriddhi Yojana will offer 6.9% interest rate against 7.5% earlier.
The revised interest rates will come into effect from April 1 and it will remain effective up to June 30, 2021.
It has been reported that the interest rate on savings deposits has been reduced by 0.5% to 3.5% from the existing 4% annually for the first time.
The steepest fall of 1.1% has been effected in the one-year term deposit.
The new rate will be 4.4% as compared to 5.5% at the moment.
The interest rate for two-year fixed deposit will be 5.0% compared to 5.5% earlier while the interest rate (quarterly) for 3-year term deposit will be 5.1% compared to 5.5% earlier.
The annual interest rate on Kisan Vikas Patra (KVP) has been reduced by 0.7% to 6.2% from 6.9%.
The Centre had kept interest rates unchanged since the past three quarters.
From April to June 2020, it had cut rates by about 70-140 bps.
