The Finance Ministry, Government of India notified 10 basis point cut in interest rates of small savings schemes for the quarter 1st July 2019 to 30th September 2019.
The announcement covers small-saving schemes such as the Post Office Saving Accounts, Post Office Time Deposits, the National Saving Certificates (NSC), the Public Provident Fund (PPF), the Kisan Vikas Patra (KVP) and Sukanya Samriddhi.
|Scheme||Rate of Interest
From 1st July 2019 to 30th September 2019
|Interest rate for the quarter
From January 2019 to March2019
|Savings account||4%||4%||Annual rest|
|1 year time deposit||6.90%||7.00%||Quarterly rest|
|2 year time deposit||6.90%||7.00%||Quarterly rest|
|3 year time deposit||6.90%||7.00%||Quarterly rest|
|5 year time deposit||7.70%||7.80%||Quarterly rest|
|5 year Recurring Deposit||7.20%||7.30%||Quarterly rest|
|5 year Senior Citizen Saving Scheme||8.60%||8.70%||Interest paid quarterly, Quarterly rest|
|5 year Monthly Income Account Scheme||7.60%||7.70%||Interest paid monthly,|
|5 year NSC||7.90 %||8.00 %||Annual rest|
|PPF (Public Provident Fund)||7.90%||8.00%||Annual rest|
|KVP (Kissan Vikas Patra)||7.60 %(matures 113 months)||7.70 %(matures 112 months)||Annual rest|
|Sukanya Samriddhi Account Scheme||8.40%||8.50%||Annual rest|
The government had announced in February 2016 that small savings rates will be set quarterly instead of the earlier system of announcing for every year so as to align them with the market rate of government securities. The cut, however, looked imminent as the yield on the G-Sec has been falling over the last 12 months. The G-sec yield last year was at 7.94 percent and is at 6.9 percent as on June 27, 2019, a fall of almost 100 basis points.
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.