New Delhi: In a severe blow to the savings of the salaried and middle class, the Centre on Friday cut interest rates earned on small savings including Public Provident Fund (PPF) and Kisan Vikas Patra (KVP) to align them closer to market rates. Interest on small saving schemes will now be reviewed after every three months. The new interest rates are applicable from April 1 to June 30 2016. Earlier interest rates were reviewed once in a financial year. PPF scheme, which is mostly subscribed by the salaried class for their retirement will now earn an interest of 8.1 per cent for the period April 1 to June 30 against current yield of 8.7 per cent.
The interest rate on KVP has been slashed to 7.8 per cent from 8.7 per cent from April 1. The rates for April-June quarter are based on government securities rates that prevailed in the previous three months — that is December, January and February.
The five-Year National Savings Certificates will earn an interest rate of 8.1 per cent from April 1 as against 8.5 per cent, at present. A five-year Monthly Income Account will fetch 7.8 per cent as opposed to 8.4 per cent now. Girl-child saving scheme, Sukanya Samriddhi Account will see interest rate of 8.6 per cent as against 9.2 per cent. Senior citizen savings scheme of five-year would now earn an interest of 8.6 per cent against current 9.3 per cent.
While the interest rate on Post Office savings has been retained at 4 per cent, the same for term deposits of one to five years has been cut. Post Office term deposits of one, two and three years command an interest rate of 8.4 per cent but from April 1, a 1-year Time Deposit will get 7.1 per cent, two-year will earn 7.2 per cent and three-year will attract interest of 7.4 per cent. Five-year time deposit will fetch 7.9 per cent.