Finance Minister Withdraws Interest Rate Cut Order On Small Saving Schemes

New Delhi, 1 April 2021: The Finance minister has announced to slash interest rates on small savings schemes, including the Pubic Provident Fund (PPF) and National Savings Certificate (NSC), on Wednesday. The order has been withdrawn; finance minister Nirmala Sitharaman announced on Thursday morning.

The government had cut interest rates on savings accounts, PPF, term deposits, RD to savings schemes for the elderly. It was said that the new rates will come into effect from 1 April and will remain in effect till 30 June 2021. However, the government has changed this decision.

In this regard, Finance Minister Nirmala Sitharaman tweeted that the rates which were in the last quarter of 2020-21, the rates will now be applicable. The orders which were passed yesterday have been changed.

Interest rates of small savings schemes of GoI shall continue to be at the rates which existed in the last quarter of 2020-2021, ie, rates that prevailed as of March 2021.
Orders issued by oversight shall be withdrawn. @FinMinIndia @PIB_India

— Nirmala Sitharaman (Modi Ka Parivar) (@nsitharaman) April 1, 2021

The annual interest on deposits in savings accounts was reduced from 4 per cent to 3.5 per cent. So far, the annual interest on PPF was reduced by 7.1 per cent to 6.4 per cent. The quarterly interest rate on deposits for one year was reduced from 5.5 per cent to 4.4 per cent. It was now announced to give only 6.5 per cent quarterly interest on savings schemes to the elderly, instead of 7.4 per cent.

Interest of 4.4 percent instead of 5.5 percent on term deposits for one year, now 5 percent instead of 5.5 percent on deposits for 2 years, 5.1 percent instead of 5.5 percent on deposits for 3 years, deposits for 5 years but the interest tax was changed to 5.8 per cent instead of 6.7 per cent. Only 5.9 per cent interest in National Savings Certificate, instead of 6.8 per cent.

The interest rate was reduced to 6.4 percent on Kisan Vikas Patra from 6.9 percent and also on Sukanya Samriddhi Yojana, from 7.6 percent to 6.9 percent. Now the old rates which were on 31 March 2021 will be considered there.