Your small savings get a big cut: Rates slashed by up to 1.1 percentage points

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The government on March 31 announced big cuts in small saving rates for the first quarter of 2021-22. The rates have been cut by up to 1.1 percentage points.

The rates for fixed deposits with up to five-year tenure have been slashed by up to 0.9 percentage points. The Centre said 1-year time deposit rates have been reduced to 4.4% from 5.5%. For 2-, 3-, 5- and 5-year time deposit rates have also been slashed from 5.5%, 5.5%, 6.7% and 5.3% to 5.0%, 5.1% and 5.8%, respectively.

Interest rates of Public Provident Fund (PPF) and Sukanya Samriddhi Scheme, most popular among small savings schemes, have also come down. The interest rate on PPF has been reduced from 7.1% to 6.4%. It will be paid on an annual basis. At the same time, instead of 7.6% on Sukanya Samriddhi Scheme, interest will now be 6.9%.

The interest rate for Senior Citizen Savings Schemes (SCSS) has been reduced from 7.4% to 6.5%. The interest calculation will be quarterly and payment will also be made. The interest rate for the monthly income account has been reduced from 6.6% to 5.7%. The calculation of interest will be monthly and it will be paid.

The Kisan Vikas Patra which used to give a return of 6.9% with maturity in 124 months will now give 6.2% in 138 months.