Interest rates for small savings schemes are notified on a quarterly basis.
New Delhi:
The government on Friday kept interest rates on small savings schemes, including NSC and PPF, unchanged for the fourth quarter of 2021-22, amid rising cases of the more contagious coronavirus pandemic and high inflation levels.
The decision also comes ahead of the assembly elections to be held in five states – Uttar Pradesh, Uttarakhand, Punjab, Himachal Pradesh and Goa. The election schedule is likely to be announced early next month.
The annual interest rate on Public Provident Fund (PPF) and National Savings Certificate (NSC) will continue to be 7.1 per cent and 6.8 per cent respectively in the fourth quarter as well.
“The rates of interest on various small savings schemes for the third quarter of the financial year 2021-22 starting from January 1, 2022 and ending on March 31, 2022 will remain unchanged from the current rates applicable for the third quarter (October). 2021 to December 31, 2021) for the financial year 2021-22,” the finance ministry said in a notification.
According to analysts, the government has retained the rates in view of the assembly elections to be held in five states.
Uttar Pradesh is the second largest contributor to the small savings scheme after West Bengal. Earlier this year, during the West Bengal assembly elections, the Center had decided to reduce the interest rate. But the Finance Ministry immediately canceled the interest rate cut of up to 1.1 per cent on small savings schemes for the first quarter, citing defaults.
Consequently, the first quarter rates were maintained at the level of the fourth quarter of the previous financial year. The cut was seen as the sharpest cut in several decades. Interest rates for small savings schemes are notified on a quarterly basis.
The one-year fixed deposit scheme will continue to earn an interest rate of 5.5 per cent during the second quarter of the current financial year, while the girl child savings scheme Sukanya Samriddhi Yojana account will earn 7.6 per cent.
The interest rate on the five-year Senior Citizens Savings Scheme will remain unchanged at 7.4 per cent. Interest on the Senior Citizens Scheme is paid quarterly. The interest rate on savings deposits will remain at 4 per cent per annum.
Fixed deposits of one to five years will fetch interest at the rate of 5.5-6.7 per cent, which will be paid quarterly, while the interest rate on recurring deposits of five years will earn a higher interest rate of 5.8 per cent.
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