Finance Minister Nirmala Sitharaman on Thursday morning said that the government is withdrawing the cut in small saving rates.
Sitharaman, in a tweet, said that the overnight order was issued by oversight and has been withdrawn, further adding that the interest rates on small savings will be retained at the level of fourth quarter of last financial year.
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Orders issued by oversight shall be withdrawn. @FinMinIndia @PIB_India
— Nirmala Sitharaman (@nsitharaman) April 1, 2021
The government on Wednesday had announced a cut in interest rates on small savings schemes, including NSC and PPF, by up to 1. 1 per cent for the first quarter of 2021-22 in line with falling fixed deposit rates of banks.
The interest rate on Public Provident Fund (PPF) was reduced by 0.7 per cent to 6.4 per cent while National Savings Certificate (NSC) was cut by 0.9 per cent to 5.9 per cent.
The steepest fall of 1.1 per cent was effected in the one-year term deposit.
The new rate was brought down to 4.4 per cent as compared to 5.5 per cent.
Interest rates for small savings schemes are notified on a quarterly basis.
Once restored, PPF and NSC will carry an annual interest rate of 7.1 per cent and 6.8 per cent, respectively.
One year term deposit scheme to earn a higher interest rate of 5.5 per cent during the first quarter of the current fiscal while the girl child savings scheme Sukanya Samriddhi Yojana account will earn 7.6 per cent as against reduced rate of 6.9 per cent.
Accordingly, the interest rate for the five-year senior citizens savings scheme would be retained at 7.4 per cent.
The interest on the senior citizens’ scheme is paid quarterly.
Interest rate on savings deposits to be restored at 4 per cent annually from the reduced rate of 3.5 per cent.
Term deposits of one to five years will fetch interest rate in the range of 5.5-6.7 per cent, to be paid quarterly, while the interest rate on five-year recurring deposits will earn a higher interest of 5.8 per cent as against the reduced 5.3 per cent.
The rollback was announced as Bengal and Assam are voting in the second phase of their respective assembly elections.
(With PTI Inputs)