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In less than 24 hours, Centre withdraws order cutting interest rates on small savings schemes

On Wednesday, the Finance Ministry had announced a sharp cut in interest rates for small savings schemes for the first quarter of the financial year 2021-22. This order has now been withdrawn.

UPDATED: April 1, 2021 09:24 IST

The government on Thursday withdrew its order slashing interest rates on small savings schemes, including National Savings Certificates (NSC) and Public Provident Fund (PPF), for the first quarter of 2021-22.

On Wednesday, the Finance Ministry had announced a sharp cut in interest rates for small savings schemes by 50-110 basis points. Interest rates for small savings schemes are notified on a quarterly basis.

In a tweet on Thursday, Union Finance Minister Nirmala Sitharaman said that the interest rates of small savings schemes of the Government of India shall continue to be at the rates that existed in the last quarter (January-March) of the financial year 2020-21.

Interest rates of small savings schemes of GOI shall continue to be at rates that prevailed as of March 2021: FM
Interest rates of small savings schemes of GOI shall continue to be at rates that prevailed as of March 2021: FM

“Orders issued by oversight shall be withdrawn,” Finance Minister Nirmala Sitharaman said.

The government order on Wednesday had slashed the interest rate on Public Provident Fund (PPF) scheme to 6.4 per cent for the April-June quarter. This was the first time since 1974 that the interest rate on PPF fell below 7 per cent.

In addition, the interest rate for National Savings Certificate (NSC) was also slashed to 5.9 per cent while the same for Sukanya Samriddhi Account’s scheme was cut from 7.6 per cent to 6.9 per cent.

Experts, however, had predicted that the rate cut was on the cards. “Banks and other financial institutes (FIs) have already reduced interest rates on savings and term deposits,” said a senior finance ministry official,” a senior official in the Ministry of Finance had told India Today.

Sourcehttps://www.indiatoday.in/business/story/order-withdrawn-interest-rate-small-savings-scheme-public-provident-fund-pf-ppf-1785821-2021-04-01

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