'Issued by oversight': Govt withdraws order slashing rates for small saving schemes - Hindustan Times

'Issued by oversight': Govt withdraws order slashing rates for small saving schemes

By | Edited by Amit Chaturvedi, Hindustan Times, New Delhi
Apr 01, 2021 08:29 AM IST

The government announced steep cuts in interest rates of small saving schemes, including the PPF and NSC, on Wednesday. That order has been withdrawn, finance minister Nirmala Sitharaman announced on Thursday morning.

The government on Thursday withdrew the order slashing rates for small saving schemes. The announcement was made by Union finance minister Nirmala Sitharaman on Twitter.

File photo of finance minister Nirmala Sitharaman.(Mint)
File photo of finance minister Nirmala Sitharaman.(Mint)

"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 Orders issued by oversight shall be withdrawn," she said on Twitter.

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The government on Wednesday cut interest rates on small savings schemes, including National Savings Certificate (NSC) and Public Provident Fund (PPF), by up to 1.1 per cent for the first quarter of 2021-22 in line with falling fixed deposit rates of banks.

The interest rate on PPF was reduced by 0.7 per cent to 6.4 per cent while the rate on NSC was cut from 6.8 per cent to 5.9 per cent.

After the move, the new interest rate on PPF went down to its lowest level since 1974, news agency PTI reported. It said that the PPF interest rate was 7 per cent between August 1974 and March 1975. Prior to that, the rate was 5.8 per cent.

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

The steepest fall of 1.1 per cent was effected in the one-year term deposit. The new rate stood at 4.4 per cent from the earlier 5.5 per cent.

While announcing the quarterly setting of interest rates in 2016, the finance ministry had said that rates of small savings schemes would be linked to government bond yields.

Last month, the Reserve Bank of India (RBI) kept interest rates static for the fourth time in a row at 4 per cent on inflationary concerns.

(With inputs from agencies)

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