Centre rolls back interest rate cuts on small savings schemes, calls it oversight

The finance ministry has withdrawn its decision to slash interest rates on small savings schemes like the Public Provident Fund and the National Savings Certificate (NSC), terming it an "oversight", on Thursday.

The rates on such schemes will continue to remain as they were during the January-March quarter, reversing the cut on interest rates of up to 110 basis points or 1.1 percentage points announced a day earlier.

"Interest rates of small savings schemes of GoI shall continue to be at the rates which existed in the last quarter of 2020-2021, ie, rates that prevailed as of March 2021. Orders issued by oversight shall be withdrawn," finance minister Nirmala Sitharaman said in a Twitter update.

This would make the fourth consecutive quarter the government has maintained the rates on such schemes.

According to the latest decision, PPF and NSC will continue to offer interest of 7.1% and 6.8% for the coming three months.

The now withdrawn order would have made the effective rates from April 1, 6.4% and 5.9% for the PPF and NSC, respectively.

The government had last cut interest rates a year ago by a sharper 140 basis points for the first quarter of 2020-21.

The Senior Citizen Savings Scheme will now earn 7.4% compared to 6.5% if the cuts had gone through, while five-year recurring deposits will offer 5.8% interest instead of 5.3%.

Similarly, one-year to three-year time deposits, will continue with 5.5% interest as against the previously envisaged reduced rates down to 4.4% interest

Savings deposits will offer 4% interest, as they did in the previous quarters, instead of the reduced 3.5%.

Interest on five-year time deposits will be maintained at 6.7%, compared to the 5.8% mentioned in yesterday's order, while the Kisan Vikas Patra will offer 6.9% interest against 6.2%.

The Sukanya Samriddhi Account scheme will now bear an interest of 7.6% from April 1, above the reduced 6.9% that would have been.