The government has left the rates on small savings schemes like the Public Provident Fund (PPF) and National Savings Certificate (NSC) unchanged for the second quarter of the fiscal, a senior government official said.
“There is no change in the interest rates,” the official said.
During the start of the first quarter of FY21, the government had lowered the rates on various schemes by as much as 1.4 percentage points.
Interest rates on small savings schemes are reviewed and applied on a quarterly basis. At the end of the March, the government reduced the rates on time deposits from 6.9% in the last quarter of FY20 to 5.5% in Q1 of this fiscal.
Similarly, it had reduced the rates on PPF and NSC from 7.9% to 7.1% and 6.8% respectively. Other popular schemes like the Kisan Vikas Patra saw rates fall from 7.6% to 6.9% and the Sukanya Samriddhi Account Scheme from 8.4% to 7.6%.
The reason for the sharp reduction was the Reserve Bank of India’s (RBI) repo rate cut to 4.4% on March 26 in response to the developing Covid-19 outbreak.
The interest rate on these schemes are based on the yields of government bonds, which fell after the RBI action. The central bank further slashed the repo rate since then to 4% in May.
A large portion of the population, generally with low-income levels, rely almost entirely on these schemes for savings and post-retirement funds.