The government on Thursday kept the interest rates on small savings schemes, including PPF and NSC, unchanged for the January-March quarter amid moderating bank deposit rates. Public Provident Fund (PPF) and National Savings Certificate (NSC) will continue to carry an annual interest rate of 7.1 per cent and 6.8 per cent, respectively.
Interest rates for small savings schemes are notified by the finance ministry on a quarterly basis. "The rates of interest on various small savings schemes for the fourth quarter of 2020-21 ending on March 31 shall remain unchanged from those notified for the third quarter (October 1-December 31, 2020)," the ministry said in a notification.
Accordingly, the interest rate for the five-year Senior Citizens Savings Scheme has been retained at 7.4 per cent. The interest on the senior citizens' scheme is paid quarterly. Interest rate on savings deposits has been retained at 4 per cent annually. The girl child savings scheme Sukanya Samriddhi Yojana will offer 7.6 per cent rate during the fourth quarter of the current fiscal.
The annual interest rate on Kisan Vikas Patra (KVP) has been retained at 6.9 per cent. Term deposits of one-five years will fetch interest rate in the range of 5.5-6.7 per cent, to be paid quarterly, while the interest rate on five-year recurring deposit is pegged at 5.8 per cent.
The unchanged small savings rates for Q4 FY2021 should help the central government to garner additional resources from this avenue, ICRA Principal Economist Aditi Nayar said. This will aid in preventing a revision in its dated borrowing programme for Q4 FY2021, despite the expected sharp widening in the fiscal deficit for the current fiscal, she added.
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