The new financial year 2020-21, which began on Wednesday, has not started on a great note for the middle class. Already bogged down by the lockdown blues, the government's move to slash interest rates on select small savings schemes starting April 1 has come as a rude shock for the investors.
On Tuesday, the government cut interest rates on select small savings schemes, including Public Provident Fund (PPF), Kisan Vikas Patra and Sukanya Samriddhi. The interest rate cuts are in the range of 70 to 140 basis points for the April-June quarter of the financial year 2020-21.
Here are the new rates:
PPF: The interest rates have been slashed by 80 bps, from 7.9 per cent to 7.1 per cent.
Kisan Vikas Patra: Interest rate cut of 70bps, from 7.6 per cent to 6.9 per cent.
Sukanya Samriddhi Yojana: From 8.4 per cent, the interest rate has been lowered to 7.6 per cent.
Post office term deposits: Post office term deposits of one to three years have been slashed by a sharp 140 bps. While the one-year deposit will fetch an interest rate of 5.5 per cent from 6.9 per cent offered earlier, the five-year deposit rate now stands revised to 6.7 per cent from 7.7 per cent. The 5-year recurring deposits will return 5.8 per cent compared with 7.2 per cent earlier.
Post Office Monthly Income Scheme: The five-year Post Office Monthly Income Scheme (MIS), where interest is paid out monthly, will fetch 6.6 per cent as compared to 7.6 per cent earlier.
Senior Citizens Savings Scheme: Interest rate for the five-year scheme has been cut 120 bps to 7.4 per cent compared to 8.6 per cent earlier.
Savings deposit: The interest rate on savings deposit has been retained at 4 per cent.
The move follows the 75 bps repo rate cut by the Reserve Bank of India last week. Interest rates on small savings schemes are revised by the government on a quarterly basis.
