Interest Rates on Small Savings Schemes: Amid rising cases of the highly contagious Omicron variant of the coronavirus and high levels of inflation, interest rates on small savings schemes, including NSC and PPF, were on Friday reduced for the fourth quarter of 2021-22. No changes have been made. Public Provident Fund (PPF) and National Savings Certificate (NSC) will continue to offer interest rates of 7.1% and 6.8% per annum, respectively, in the fourth quarter as well.
The decision comes ahead of the upcoming assembly elections in five states – Uttar Pradesh, Uttarakhand, Punjab, Himachal Pradesh, and Goa. The election schedule is likely to be announced early next month.
The Finance Ministry said in a notification, “Interest rates on different small savings schemes for the fourth quarter of the financial year 2021-22 (starting from January 1, 2022, and ending on March 31, 2022) for the third quarter (October 1), 2021 to December 31, 2021) will remain the same as the current rates.
According to analysts, the government has retained the rates in view of the assembly elections to be held in five states. Uttar Pradesh is the second-largest contributor to the small savings scheme after West Bengal.
The Center had decided to cut interest rates during the West Bengal assembly elections earlier this year, but the finance ministry immediately canceled the rate cut of up to 1.1 percent on small savings schemes for the first quarter, citing defaults. Gave.
Consequently, the rates for the first quarter of the current financial year were retained at the level of the fourth quarter of the previous financial year. That cut was seen as the sharpest cut in several decades. The interest rates for small savings schemes are fixed on a quarterly basis.
The one-year fixed deposit scheme will continue with the interest rate of 5.5 percent during the second quarter of the current financial year, while the interest rate on the girl child savings scheme Sukanya Samriddhi Yojana will remain at 7.6 percent.
The interest rate on the five-year Senior Citizens Savings Scheme will remain unchanged at 7.4 percent. Interest in the Senior Citizens Scheme is paid on a quarterly basis. The interest rate on savings deposits will remain at 4 percent per annum.
Interest will be available at the rate of 5.5-6.7 percent on FDs of one to five years, which will be paid on a quarterly basis. Whereas the interest rate on a five-year recurring deposit will be 5.8 percent.