The government has kept the interest rates on post office small savings schemes, including PPF and NSC, unchanged for the January-March quarter. Public Provident Fund (PPF) and National Savings Certificate (NSC) will continue to give 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 fourth quarter of 2020-21, starting from January 1 and ending March 31, 2021, shall remain unchanged,” the finance ministry said in a notification.
The interest rates for small savings schemes are notified by the Finance Ministry every quarter.
Accordingly, the interest rate for the five-year Senior Citizens Savings Scheme (SCSS) has been retained at 7.4 per cent. The interest in the senior citizens’ scheme is paid quarterly. The interest rate on savings deposits will continue to give 4 per cent annually.
Sukanya Samriddhi Yojana (SSY), the girl child savings scheme, will offer a 7.6 per cent rate in this quarter.
The annual interest rate on Kisan Vikas Patra (KVP) has been retained at 6.9 per cent.
Term deposits of 1-5 years will fetch an interest rate in the range of 5.5-6.7 per cent. The interest rate on five-year recurring deposit is pegged at 5.8 per cent.
Earlier, for the quarter of July to September and October to December 2020, the government had kept the interest rates on small saving schemes unchanged. It was only in the April to June 2020 quarter which saw a revision in the rates.
A revision in interest rates of the small saving schemes, in any quarter, does not impact the existing investors in some of the small saving schemes. For the investor who invests in NSC, KVP, Time deposits, SCSS, the rate of interest remains fixed until maturity.
PPF, NSC, SSY, Kisan Vikas Patra and other post office saving schemes will continue to score over bank fixed deposits as currently, they are giving lucrative interest rates. Amid the coronavirus pandemic, the Reserve Bank of India (RBI) had cut the repo rate by 115 basis points (bps) in 2020. And with every repo rate cut, top lenders slashed FD rates. Repo rate is the rate at which RBI lends money to banks. Currently, the banks are providing interest of around 6 per cent across most tenures.
| Sl.No. | Instruments | Rate of interest w.e.f 01.04.2020 to 31.12.2020 | Compounding Frequency* |
|---|---|---|---|
| 01. | Post Office Savings Account | 4.0 | Annually |
| 02. | 1 Year Time Deposit | 5.5(Annual Interest R. 561 on Rs. 10000 deposit) | Quarterly |
| 03. | 2 Year Time Deposit | 5.5(Annual Interest R. 561 on Rs. 10000 deposit) | Quarterly |
| 04. | 3 Year Time Deposit | 5.5(Annual Interest Rs. 561 on Rs. 10000 deposit) | Quarterly |
| 05. | 5 Year Time Deposit | 6.7(Annual Interest R. 687 on Rs. 10000 deposit) | Quarterly |
| 06. | 5 Year Recurring Deposit Scheme | 5.8 Maturity value for Rs. 100 Dn. 5 Year = 6969.67 After extension with deposit. 6 Year = 8620.98 7 Year= 10370.17 8 Year= 12223.03 9Year= 14185.73 10Year=16264.76 | Quarterly |
| 07. | Senior Citizen Savings Scheme | 7.4(Quarterly interest Rs. 185 on Rs. 10000 deposit) | Quarterly and Paid |
| 08. | Monthly Income Account | 6.6(Monthly int. Rs. 55 on Rs. 10000 deposit) | Monthly and paid |
| 09. | National Savings Certificate (VIII Issue) | 6.8(Maturity Value Rs. 1389 for Rs.1000 deposit) Accrued Interest for IT purpose for Rs. 1000 Dn. 1stYear= Rs.68.00 2ndYear=Rs.72.62 3rd Year=Rs.77.56 4th Year=Rs.82.84 5th Year=Rs.88.47 | Annually |
| 10. | Public Provident Fund Scheme | 7.1 | Annually |
| 11. | Kisan Vikas Patra | 6.9 (will mature in 124 months) | Annually |
| 12. | Sukanya Samriddhi Account Scheme | 7.6 | Annually |
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