Government keeps interest rates on small savings schemes unchanged for Q2

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In a relief to savers, the government on Wednesday kept interest rates on small savings schemes, including NSC and PPF, unchanged for the second quarter of 2021-22 amid the COVID-19 pandemic. Public Provident Fund (PPF) and National Savings Certificate (NSC) will continue to carry an annual interest rate of 7.1% and 6.8%, respectively, in the second quarter as well.

“The rates of interest on various small savings schemes for the second quarter of the financial year 2021-22 starting from July 1, 2021, and ending on September 30, 2021, shall remain unchanged from the current rates applicable for the first quarter (April 1, 2021 to June 30, 2021) for FY 2021-22,” the finance ministry said in a notification.

The government had on April 1 swiftly revoked a steep interest rate cut of up to 1.1% for the first quarter on small savings schemes, citing oversight.

As a result, the first quarter rates were retained at the level of the fourth quarter of the last financial year. The cut was touted as the steepest cut in many decades.

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

One-year term deposit scheme will continue to earn an interest rate of 5.5% during the second quarter of the current fiscal, while the girl child savings scheme Sukanya Samriddhi Yojana account will earn 7.6%.

The interest rate on the five-year senior citizens’ savings scheme would be retained at 7.4%. The interest on the senior citizens’ scheme is paid quarterly.

The interest rate on savings deposits will continue to be 4% per annum.

Term deposits of one to five years will fetch an interest rate in the range of 5.5-6.7%, to be paid quarterly, while the interest rate on five-year recurring deposits will earn a higher interest of 5.8%.

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