Money & Banking

Govt leaves interest rate on small-saving schemes unchanged

Our Bureau New Delhi | Updated on March 29, 2019 Published on March 29, 2019

Ahead of crucial polls, Ministry plays its safe

The Finance Ministry on Friday said that it has decided to keep the interest rate unchanged on small savings schemes for the three-month period beginning April 1.

The announcement covers small-saving schemes such as the Post Office Saving Accounts, Post Office Time Deposits, the National Saving Certificates (NSC), the Public Provident Fund (PPF), the Kisan Vikas Patra (KVP) and Sukanya Samriddhi.

Normally, one can participate in these schemes through post offices; however, many banks offer the PPF account facility. The popularity of these schemes among the salaried class can be attributed to the tax benefit they offer. Though there has been no change in the interest rate, these schemes still offer higher returns compared to bank deposits.

The unchanged interest rate means the NSC (5 years) and the PPF (15 years) will fetch 8 per cent interest, while money deposited in KVP will double in little over nine years . At the same time, if one is parking money in a fixed deposit with a maturity of five years with the State Bank of India, he/she will get 6.85 per cent. Senior citizens will get half a per cent more: 7.35 per cent.

 

Based on the recommendations of the Shyamala Gopinath panel, interest rates on these schemes are reviewed before the end of every quarter, and accordingly, new rates are announced for the next quarter.

In an effort to reflect the market trend, the rates are aligned with those on government bonds of similar maturities with certain spread, which will be maximum for the senior citizen saving scheme.

Though the yield on 10-year government bonds have come down, lowering the rate during the election season might prove costly. This explains the Finance Ministry’s decision to keep the rates unchanged.

Published on March 29, 2019

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Sincerely,

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.