Wednesday, April 13, 2016

New Interest Rate on Small Savings Schemes

Currently, the interest rates of all small saving schemes are reviewed every few years. However, from April 1, 2016, the rate of return on all small savings schemes including the PPF would be recalibrated every quarter. The returns on Sukanya Samriddhi Yojana, the Senior Citizen Savings Scheme and the Monthly Income Scheme will continue to enjoy a higher return than government securities but would also face a quarterly reset.

To push lower interest rates and make a switch to market-linked rates for small savings schemes, the government has slashed returns on schemes like Kisan Vikas Patras and recurring deposits by 0.25 per cent. It has also linked the returns of all small savings schemes to the market rate prevailing on government securities, to be re-calibrated every quarter, effective from April 1, 2016.