What were the interest rate changes on small saving schemes?

The government has decided to maintain the interest rates on all small saving schemes for the July -September quarter. This is applicable to all small saving schemes including Public Provident Fund, Sukhanya Samruddhi, Kisan Vikas Patra. Investors/depositors were apprehensive about potential interest rate cuts by the government in the background of recent sharp interest cuts by banks.

The government too, in the recent past, has been slashing rates on small savings schemes. In the April-June quarter, the government had reduced rates of small savings schemes by 70-140 bps. If the government had followed through with a rate cut this quarter, rates for PPF would have fallen to a 46-yr low of 7%. Interest rates on small savings schemes are reviewed and applied on a quarterly basis.

The interest rate on these schemes is pegged to the yields of government bonds, which fell after RBI’s recent repo rate cut. The repo rate at present stands at 4%. Given below are the interest rates for small savings schemes for the July-September quarter: