Govt slashes interest rates on Fixed Deposits, savings schemes amid coronavirus crisis

Govt slashes interest rates on Fixed Deposits, savings schemes amid coronavirus crisis

Days after the Reserve Bank of India slashed the repo rate by 75 basis points, the Department of Economic Affairs, Ministry of Finance on Tuesday announced interest rate cuts on small savings schemes for the first quarter of the Financial Year 2020-2021.

The interest rate has been slashed on several schemes in the range of 70 basis points to as much as 140 basis points.

As per the government notification, interest rates on Small Savings like Public Provident Fund (PPF), Kisan Vikas Patra, National Savings Certificate (NSC), Senior Citizens Scheme, Monthly Income Scheme have been reduced.

For Public Provident Fund (PPF) and Sukanya Samriddhi Yojana, the interest rate has been cut by 0.8 per cent, making it 7.1 per cent. Senior Citizens Scheme will now get 7.4 per cent interest instead of earlier 8.6 per cent. The Monthly Income Scheme will get 6.6 per cent (cut by 1 per cent) and while NSC will get an interest of 6.8 per cent (cut by 1.1 per cent).

On the other hand, post office time deposits of certain tenors have seen the sharpest cut of 1.4 per cent. It may be noted that interest rates have been kept unchanged since July 2019.

Not only these, but interest rates have also been reduced on bank fixed deposits and saving schemes. Here's the list.

Sukanya Samriddhi Yojana used to get 8.4 per cent interest earlier, now it will get 7.6 per cent.

Kisan Vikas Patra will get 6.9 per cent instead of 7.6 per cent.

1, 2, 3 year-old bank FD used to get 6.9 per cent interest earlier, now it will get 5.5 per cent.

Interest on 5-year FD was 7.2 per cent, now it will get 5.8 per cent.

National Saving Certificate used to get 7.9 per cent interest, now it will get 6.8 per cent.

Earlier Interest on PPF was 7.9 per cent, now it will get 7.1 per cent.

It may be noted that last week, RBI slashed the repo rate by 75 basis points along with some other measures that were aimed at reviving the economy amid the coronavirus lockdown.