Finance Minister Nirmala Sitharaman on Thursday said the government will withdraw orders to cut interest rate on small savings schemes and assured to restore the rates to the last quarter of the financial year ended March 31.
The Finance Ministry on Wednesday had reduced interest rate by up to 1.1 per cent across various small savings schemes including National Savings Certificates (NSC) and Public Provident Fund (PPF).
"Interest rates of small savings schemes of GoI shall continue to be at the rates which existed in the last quarter of 2020-2021, ie, rates that prevailed as of March 2021. Orders issued by oversight shall be withdrawn," Sitharaman said in an early morning tweet.
Interest rate on Public Provident Fund (PPF) was reduced by 0.7 per cent to 6.4 per cent while National Savings Certificate (NSC) was to earn 0.9 per cent less at 5.9 per cent.
The steepest fall of 1.1 per cent was effected in the one-year term deposit. The new rate was brought down to 4.4 per cent as compared to 5.5 per cent.
Interest rates for small savings schemes are notified on a quarterly basis.
Once restored, PPF and NSC will carry an annual interest rate of 7.1 per cent and 6.8 per cent, respectively.
One year term deposit scheme to earn a higher interest rate of 5.5 per cent during the first quarter of the current fiscal while the girl child savings scheme Sukanya Samriddhi Yojana account will earn 7.6 per cent as against reduced rate of 6.9 per cent.
Accordingly, the interest rate for the five-year senior citizens savings scheme would be retained at 7.4 per cent. The interest on the senior citizens' scheme is paid quarterly.
Interest rate on savings deposits to be restored at 4 per cent annually from the reduced rate of 3.5 per cent.
Term deposits of one to five years will fetch interest rate in the range of 5.5-6.7 per cent, to be paid quarterly, while the interest rate on five-year recurring deposits will earn a higher interest of 5.8 per cent as against the reduced 5.3 per cent.