The government on Thursday kept the interest rates on small savings schemes, including NSC and PPF, unchanged for the third quarter of 2021-22 amid the COVID-19 pandemic and elevated level of inflation. Public Provident Fund (PPF) and National Savings Certificate (NSC) will continue to carry an annual interest rate of 7.1 per cent and 6.8 per cent, respectively.
"The rates of interest on various small savings schemes for the third quarter of the financial year 2021-22 starting from October 1, 2021, and ending on December 31, 2021, shall remain unchanged from the current rates applicable for the second quarter (June 1, 2021 to September 30, 2021) for FY 2021-22," the finance ministry said in a notification. According to analysts, the upcoming Uttar Pradesh assembly elections may also have been a factor behind the government's decision to keep rates unchanged.
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Uttar Pradesh is the second highest contributor to the small savings schemes after West Bengal. During the West Bengal assembly elections earlier this year, the Centre decided to reduce the interest rate on these schemes. However, the very next day on April 1, the finance ministry revoked the steep interest rate cut of up to 1.1 per cent, citing an oversight.
As a result, the first quarter rates were retained at the level of the fourth quarter of the last financial year. The cut was touted as the steepest in many decades. Interest rates for small savings schemes are notified on a quarterly basis.
One-year term deposit scheme will continue to earn an interest rate of 5.5 per cent, 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 would be retained at 7.4 per cent. The interest on the senior citizens' scheme is paid quarterly.
Interest rate on savings deposits will continue to be 4 per cent per annum. 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.
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