13/02/2016
Interest rates for small savings schemes, may be
reduced by the government
Interest rates for small savings
schemes, such as Post Office Savings Account, Public Provident Fund and Post
office Fixed Deposit Scheme, may be reduced by the government to align them
more closely with the market rates, Economic Affairs Secretary Shaktikanta Das
said.
The new rates would be applicable
from April 1, 2016, Mr. Das said, without elaborating on the quantum of the
cut. The rates for the long-term schemes and those for the girl child and
senior citizens will remain unaffected by the decision, “Whatever policy rates
are being announced by the Reserve Bank, the small savings rate will also pass
it on….the effort has been such that the reduction in rates is passed on and
given effect to the system,” Mr. Das said.
The Reserve Bank, over the last one
year, has reduced interest rates by over a percentage point. At present, the
small savings rates are linked to government securities and are readjusted
every year. The decision is to start adjusting the rates on quarterly basis,
Mr. Das said. “The executive order and notification would be issued in a day or
two… broadly the underlying philosophy of the planned changes is to align the
small savings rates more frequently and more closely to the market-aligned.”
The smalls saving schemes include
Post Office Monthly Income Scheme (MIS), PPF, Post Office Fixed Deposit Scheme,
Senior Citizens Savings Scheme, Post Office Savings Account and Sukanya
Samriddhi Accounts.
While the rates for the girl child
and senior citizen schemes will also be adjusted every quarter, the spreads
they have over the G-Sec rates will be left unaltered, Mr. Das said.
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