Department of Economic Affairs Secretary Atanu Chakraborty has hinted at revision in small savings rate next quarter, in line with market rate, a development that could lead to speedier transmission of monetary policy rate.
During the current quarter, the government refrained from cutting interest rates on small savings schemes, including Public Provident Fund (PPF) and National Savings Certificate (NSC), despite moderating bank deposit rates.
"In India, right now we have about Rs 12 lakh crore in small savings schemes and roughly Rs 114 lakh crore in bank deposits. So the liability side of banks is getting affected by Rs 12 lakh crore. When banks say this, it seems a bit of a tail wagging the dog situation," he said.
Nevertheless, he said that the rate of small savings should have some linkages to market rate, which is largely determined by the G-sec rates.
Stating that the Shyamala Gopinath Committee report has been accepted, but operation of the linkage was still in works, he said "wait for this quarter interest rates. That will give you a fairly good indication."
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