Government today announced plans to slash the interest rates on PPF and NSC for the Apr-June quarter. The interest rates of these schemes have been reduced between 70bps and 140 bps for the Apr-June period. As a result PPF to fetch 7.1%, NSC 6.8% between the said period.
The government today announced a cut in the interest rates on the small saving schemes due to the outbreak of Coronavirus, the interest rates on the small savings schemes have been reduced for the first quarter (April to June) of FY 2020-21. According to the government notification the interest rates have been cut between 70 and 140 basis points.
The interest rates for the Public Provident Fund (PPF) and Sukanya Samriddhi Yojana have been cut by 0.8% or 80 bps, each.
The interest rates on the Post office time deposits (of certain tenors) have been cut at 1.4 percent or the 140 bps. These changes will give less earning on these saving schemes.
Following table gives you more details on the slashed interest rates:
% change in Small Savings schemes interest rates
|Instrument||Interest rate (%) from Jan 1, 2020||Interest rate (%) from April 1, 2020||Change(%)|
|1 year Time Deposit||6.9||5.5||-1.4|
|2 year Time Deposit||6.9||5.5||-1.4|
|3 year Time Deposit||6.9||5.5||-1.4|
|5 year Time Deposit||7.7||6.7||-1|
|5 year Recurring Deposit||7.2||5.8||-1.4|
|5 year Senior Citizen Savings Scheme||8.6||7.4||-1.2|
|5 year Monthly Income Account||7.6||6.6||-1|
|5 year National Savings Certificate||7.9||6.8||-1.1|
|Public Provident Fund||7.9||7.1||-0.8|
|Kisan Vikas Patra||7.6||6.9||-0.7|
|Sukanya Samriddhi Yojana||8.4||7.6||-0.8|
This is bad news for the investors with the fixed income as their income on the savings will sharply reduce in this period.
Moreover the government's future plan will depend on the condition of Coronavirus in the country in the coming month.