The interest in the small savings scheme for the quarter of January -March 2021, remains unchanged. The finance ministry made an announcement on 31st December 2020 that the interest rates on small savings schemes basket comprise 12 instruments including the National Saving Certificate (NSC), Public Provident Fund (PPF), Kisan Vikas Patra (KVP), and Sukanya Samridihi Scheme will be the same as the previous quarter of October -December 2021.
The Present interest rates on small savings are as under
|
Scheme |
Rate of interest from January 2021 to March 2021 |
Rate of interest from January 2020 to March 2020 |
Interest compounded
|
|
Savings account |
4.00% |
4.00% |
Annual rest |
|
1-year time deposit |
5.50% |
6.90% |
Quarterly rest |
|
2-years time deposit |
5.50% |
6.90% |
Quarterly rest |
|
3-years time deposit |
5.50% |
6.90% |
Quarterly rest |
|
5-years time deposit |
6.70% |
7.70% |
Quarterly rest |
|
5-years Recurring Deposit |
5.80% |
7.20% |
Quarterly rest |
|
5yearsr Senior Citizen Saving Scheme |
7.40% |
8.60% |
Interest paid quarterly, Quarterly rest |
|
5- years Monthly Income Account Scheme |
6.60% |
7.60% |
Interest paid monthly, |
|
5 -years NSC |
6.80 % |
7.90 % |
Annual rest |
|
PPF (Public Provident Fund) |
7.10% |
7.90% |
Annual rest |
|
KVP (Kisan Vikas Patra) |
6.90 %(matures 124 months) |
7.60 %(matures 113 months) |
Annual rest |
|
Sukanya Samriddhi Account Scheme |
7.60% |
8.40% |
Annual rest |
The government resets the interest rate at the beginning of every quarter since 2016 based on yields of government securities of the corresponding maturity with some spread on the scheme for senior citizens, as advised by the Shyamala Gopinath Committee. The Economic Survey had earlier suggested that the interest rates on the small savings schemes be reduced to bring them in consonance with the interest rates prevailing in the economy, as the Yields on dated Government Securities (G-Secs) continuously on the decline. The commercial banks have also been complaining that high rates of small savings schemes prohibit them from cutting deposit rates, it was expected a downward revision in interest rates for small savings schemes for the ensuing quarter, but the government preferred to keep them unchanged.
Other important news on Small savings instruments:
During the announcement of interest for the quarter April -Jun 18, the Ministry withdrew the earlier restrictions for credit of interest in respect of small savings to basic Savings Bank account. Now all the interest and maturity proceeds of small savings instruments operated by the Department of Posts may be paid to the depositors through the depositor’s savings account standing at a post office or any commercial bank, by cheque or in cash.
The PPF account rules are recently modified by the Government for the benefit of account holders. As per modified PPF account holders can now make deposits in multiples of ₹50 any number of times in a financial year with a maximum of ₹1.5 lakh a year. Earlier, a maximum of 12 deposits was permitted in a period of 1 year. Read: New rules of PPF
Retirement can be great joy all through your life if you have sufficient money to spend. One of the greatest difficulties after retirement you may face is handling of lump-sum money you have received from PF, Gratuity, Leave encashment, commutation of pension, etc. For the investment of retirement corpus, you will have to structure your investments in two ways. Read related article: “Retired? make informed decisions related to your investments”
