Amidst the economy recovering from the adverse effects of the COVID19 pandemic and the resulting lockdowns, the Ministry of Finance today announced interest rate cuts on the small savings deposits as well as the public provident fund (PPF). The PPF interest rate below 7% would be the first time since 1974, a 46 year low.
In a notification issued by the Department of Economic Affairs Wednesday, the finance ministry announced that the rate of interest will be reduced on savings deposit by 0.5 per cent. It will now be reduced to 3.5 per cent as opposed to the earlier 4 per cent. It also informed that PPF interest rates will be slashed from 7.1 per cent to 6.4 per cent. These changes come into effect from tomorrow, April 1.
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Last year, in the April-June quarter of 2020-21, similar interest rates cuts were announced when the country witnessed large-scale lockdowns for the first time in the wake of the COVID19 pandemic. In the April-June quarter of 2020-21, the government had slashed rates of small savings schemes by 70-140 bps (100 bps = 1 per cent).
From April 1, 2021 (Thursday) onwards, saving schemes will provide interest rates as follows: Public Provident Fund (PPF) – 6.4 per cent down from 7.1 per cent earlier, National Savings Certificate (NSC) – 5.9 per cent, down from 6.8 per cent earlier, Sukanya Samriddhi Yojana (SSY) – 6.9 per cent, down from 7.6 per cent earlier. Post office time deposit rates across tenures have been reduced by 0.40- 1.1 per cent and will earn in the range of 4.4- 5.3 per cent.
The finance ministry also extended the deadline for linking the Permanent Account Number (PAN) to Aadhaar by another three months, from March 31, 2021 to June 30, 2021 in view of the difficulties arising out of the COVID-19 pandemic.
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