Govt. reduces the rate of interest on small saving schemes

Central Government drastically reduces the rate of interest on the small saving schemes for the quarter 01st April 2021 to 30th June 2021. The Ministry of Finance vide its circular dated 31st March 2021 has declared the rate cut in various schemes including Public Provident Fund, Sukanya Samriddhi Account Scheme, and Senior Citizen Savings Schemes.

The rate of interest on:-

Saving Schemes Reduces from 4 percent to 3.5 percent.

One-Year Time Deposit reduces from 5.5 percent to 4.4 percent.

Two-Year Time Deposit reduces from 5.5 percent to 5 percent.

Three-Year Time Deposit reduces from 5.5 percent to 5.1 percent.

A Five-Year Time Deposit reduces from 6.7 percent to 5.8 percent.

The Five-Year Recurring Deposit reduces from 5.8 percent to 5.3 percent.

Senior Citizen Saving Schemes reduces from 7.4 percent to 6.5 percent.

The Monthly Income Account reduces from 6.6 percent to 5.7 percent.

The Monthly Income Account reduces from 6.6 percent to 5.7 percent.

Public Provident Fund Scheme reduces from 7.1 percent to 6.4 percent.

Kisan Vikas Patra reduces from 6.9 percent to 6.2 percent.

Sukanya Samridhi Account Scheme reduces from 7.6 percent to 6.9 percent.

These rate cuts follow the overall interest rate cut movement in the financial system. When the bank rate cut falls sharply these schemes have to follow the trend.

All these schemes look less lucrative now, specially the Public Provident Fund and Sukanya Samriddhi Scheme where the majority of the middle class save their money.

The full text of The Ministry of Finance Circular

Update on 01-04-2021

Interestingly, Government has withdrawn the aforesaid order in the morning on 01st April 2021 saying that order has been issued by “Oversight”.

Hon’ble Finance Minister Mrs. Nirmala Sitharaman has announced through their Twitter handle that “Interest rates of small savings schemes of GoI shall continue to be at the rates which existed in the last quarter of 2020-2021, i.e., rates that prevailed as of March 2021. Orders issued by oversight shall be withdrawn.”.

Accordingly, interest rates on all of the aforesaid small saving schemes will be continue at the rate prevailing in the quarter ending March 2021.