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June 29, 2019

Govt cuts Interest Rate on Small Savings schemes

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The government has reduced interest rates on small savings schemes, including National Savings Scheme, Kisan Vikas Patra and Public Provident Fund by 10 basis points for the July-September 2019 quarter. The move is aimed at matching the softening of interest rates in the banking sector since the Reserve Bank of India (RBI) cut its benchmark policy rate thrice during the year.

PPF and National Savings Certificate (NSC) will yield 7.9% annual interest from the earlier 8%. KVP will fetch 7.6% with maturity of 113 months as compared with 7.7% with maturity of 112 months.

The girl child savings scheme Sukanya Samriddhi Account will fetch a lower return of 8.4% as compared with 8.5%. Similarly, term deposits of 1-3 years will fetch interest rate of 6.9%, to be paid quarterly, while the five-year quarterly pegged at 7.7% and for recurring 7.2% from existing rate of 7.3%.

Important Points to Note :
  • Govt has reduced interest rate on PPF to 7.9% from 8% now.
  • Interest on 5year NSC has also been cut to 7.9%.
  • Interest rate on Sukanya Samridhi Yojana has been brought down to 8.4% from 8.5%.
  • Interest rate on Kisan Vikas Patra has come down to 7.6% from 7.7%. It will now mature in 113 months instead of 112 months.
  • The interest rates on 5 year time deposits, 5-year recurring deposits and the 5-year Senior Citizens Savings Scheme have been lowered by 10 basis points.
  • Senior citizens scheme will now attract an interest rate of 8.6%.
  • 5-year time deposit and 5 year recurring deposit will attract interest rates of 7.7% and 7.2% respectively.
  • Postal savings rate remains unchanged at 4%. 

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