The central government has slashed interest rates on almost all small savings schemes including the immensely popular Public Provident Fund (PPF). The new rates will be come into effect from April 1, 2017 and will be applicable for the quarter April-June 2017.
The 0.10% is likely to affect scores of citizens across the country especially the ones who depend heavily on interest income to make both ends meet. Barring the Post Office Monthly Income Scheme and Post Office Saving Account, the rates have been cut across the board.
The 5-Year National Savings Certificate (NSC) will fetch an interest of 7.9% while the KVP instruments will carry interest rate of 7.6%.
The interest rate on PPF for the forthcoming quarter has been slashed to 7.9%. This is the first time in the last 40 years that the interest rate on this investment cum saving scheme has fallen below 8%.
PPF still remains a lucrative option. “0.10% decrease in the interest rate of PPF is not huge in the current falling interest rate scenario. Given that PPF still offer a return of 7.9%, that too tax free, which no other instrument provide, one can continue investing in it,” Suresh Sadagopan, a financial planner was quoted as saying by Live Mint.
The interest rates on Sukanya Samriddhi Account Scheme and five-year Senior Citizens Savings Scheme have also been slashed by 0.1%. These schemes will now fetch 8.4% return.