PPF Interest Rate: The Central Government has withdrawn its decision to reduce the interest rates on small saving schemes from 4 per cent to 3.5 per cent. Finance Minister Nirmala Sitharaman announced the withdrawal of this decision by tweeting on 1 April.
Finance Minister Nirmala Sitharaman has announced the withdrawal of this order, hours after the Finance Ministry issued a notification to cut interest rates on small savings schemes including NSC and PPF.
In his tweet, Sitharaman has said that the rates applicable to small saving schemes by the government will remain at the same level as in the last quarter of fiscal year 2020-21.
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Orders issued by oversight shall be withdrawn.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 (nsitharaman) April 1, 2021
That is, the interest rates applicable to these schemes will remain at the level of March quarter of fiscal year 2021. He further said that the earlier order to reduce rates will be withdrawn soon.
Earlier, the finance ministry announced that the interest rates applicable to small savings schemes would be reduced from 4 per cent to 3.5 per cent from the date of April 1, 2021.
The ministry had also said in its statement that this rate cut has been done keeping in mind the changes in the rates in the entire financial system.
What was the decision made the day before?
The finance ministry had cut the interest rate of the Public Provident Fund (PPF) to 6.4%, down from 7% a year. Whereas before this the interest rate on PPF was 7.1%. If it were applicable, for the first time after 1974, the government would have given such a low interest rate on PPF. The 6.4% interest rate on PPF was the lowest in the last 47 years.
The Central Government had reduced the interest rates on One Year Time Deposit from 5.4% to 4.4% and the interest rate on recurring deposits ranging from 2 to 5 years to 0.5%. They will now get interest from 5% to 5.8%, which was earlier from 5.5% to 6.7%. If this deduction were implemented, the Senior Citizens Savings Scheme would now get an interest of 6.5% instead of 7.4%.
Apart from this, 6.2% interest was fixed on Kisan Vikas Patra instead of 6.9%. At the same time, the interest on Sukanya Samriddhi Yojana was reduced from 7.6% to 6.9%. Whereas, on National Saving Certificate (NSC), there would have been 5.9% interest instead of 6.8%.
This is the second time in the past 1 year that the interest rate for small savings schemes was cut. But the government reversed its decision a day later. The government had not made any changes in interest rates in the last 3 quarters. The central government cut the interest rates the most on a 1-year time deposit. Its interest rates were cut by 1.1%.
However, now these decisions will not have any effect on the common people as the government has changed the decision within a day.
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