Good or bad, Indian Finance ministry has gone for reduction of interest rates on small savings schemes.
The decision is in line with the recommendations of Shyamala Gopinath Committee, which had suggested that returns should be in sync with market rates determined by the returns offered by other securities.
The revision in interest rates follows a decision taken by government last year to link the small savings returns with the market rate.
Hence, at the beginning of the financial year, the interest rates for the financial year are announced by Indian Finance ministry. Usually, the rates are effective from April 1, and the new rates are announced in the last of week of March.
Interest on PPF (Public Provident Fund) by 0.1 per cent to 8.7 per cent. It has also cut the interest rate on five-year NSC (National Savings Certificate) to 8.5 per cent from 8.6 per cent and on 10-year NSC to 8.8 per cent from 8.9 per cent.
However, the rates on savings deposit schemes and on fixed deposit of up to one year run by post offices has been kept unchanged at 4% and 8.2%, respectively.
The rate for senior citizens savings scheme (SCSS) will now stand at 9.2%, down from 9.3%.
The interest rates would be applicable for the entire 2013-14 fiscal.
Though the interest rate cut is very small, it would have done wonders if there had been an increase, instead of reduction. Hope for better time next year i.e 2014-15 fiscal
- Government cuts Public Provident Fund, National Savings Certificate rates (profit.ndtv.com)
- PPF, NSC rates cut by 0.1 pc, savings deposits unchanged (ibnlive.in.com)
- Government Prunes the Interest Rates Effective From 01-04-2013 (ecopackindia.wordpress.com)