Central govt makes U-turn of on interest rate reduction on small savings

New Delhi: Late last night, the PM Modi government had given a shock to the common man by drastically cutting interest rates on small savings schemes, but today the government has withdrawn it. 

Union Finance Minister Nirmala Sitharaman announced that the order would be withdrawn. Earlier the interest on schemes from National Saving Certificate or NSC and Public Provident Fund or PPF was cut, causing loss to crores of depositors.

“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 Orders issued by oversight shall be withdrawn,” Finance Minister Nirmala Sitharaman tweeted this morning.

This decision of the government is being linked to the assembly elections to be held in three other states along with West Bengal and Assam.

Last evening (March 31), on the last day of the last financial year, the government cut interest rates on small savings schemes. According to the order issued by the Ministry of Finance, the rates of small savings schemes were reduced by 50-100 basis points.

As per the order, the interest rate on PPF reduced from 7.1% to 6.4%, while the rates on Senior Citizen Savings Schemes, Monthly Income Account, National Savings Certificate, Kisan Vikas Patra were 6.5%, 5.7%, 5.9%, 6.2% respectively. was given. These rates were to come into effect from today. The new interest rates were the lowest since 1974.

The interest rate on small savings schemes is revised every quarter. Earlier, interest rates on small savings schemes were reduced by a large margin in the first quarter of the financial year 2021-22.

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However, the latest order of the Finance Ministry has come as a major relief to savers and senior citizens, who mainly depend on interest income from these schemes to earn regular income.

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