Govt cuts interest rates on small savings schemes as lockdown continues

The government has cut interest rates on small savings schemes by 70 to 140 basis points (bps) for the April-June quarter of the financial year 2020-21, announcing another measure to shore up resources as it manages the implication of a three-week national lockdown against the coronavirus pandemic.

Interest rates on public provident fund the quarter were cut by 80 bps to 7.1 per cent as those for Kisan Vikas Patra were slashed by 70 bps to 6.9 per cent.

Interest rates were also cut for a senior citizens saving scheme and National Savings Certificate.

Interest rates for small savings schemes are notified on a quarterly basis.

With the reduction, term deposits of 1-3 years will now fetch an interest rate of 5.5 per cent from the existing 6.9 per cent, down 1.4 per cent, according to a notification by the finance ministry.

Interest rates are paid quarterly, while the five-year term deposit will earn 6.7 per cent from the current rate of 7.7 per cent.