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    Govt reverses decision to cut interest rates of small savings schemes

    Govt reverses decision to cut interest rates of small savings schemes

    Govt reverses decision to cut interest rates of small savings schemes
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    By CNBCTV18.com  IST (Updated)

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    The government on Thursday reversed its decision to cut interest rates on small savings schemes.

    The government on Thursday reversed its decision to cut interest rates of small savings schemes.
    "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," the Finance Ministry said in a tweet.
    "Orders issued by oversight shall be withdrawn," it added.
    This came after the Ministry of Finance had on March 31 announced a cut in the small savings schemes by 50 to 110 basis points for the first quarter of the financial year starting April 1, 2021.
    One-year time deposit rates were cut to 4.4 percent from 5.5 percent, 2-, 3-, 4- and 5-year recurring deposit rates were cut to 5 percent, 5.1 percent, 5.8 percent and 5.3 percent, from 5.5 percent, 5. 5 percent, 6.7 percent and 5.8 percent, respectively. Interest rates on senior citizen savings schemes interest were cut to 6.5 percent from 7.4 percent. The rate cut had taken take PPF interest rates to below 7 percent.
    However, the decision has been withdrawn now and rates will continue to be the same as they existed in the last quarter.
    Here's a look at the existing interest rates of small savings schemes:
    InstrumentInterest rate
    Savings deposit4%
    1 year Time Deposit5.5%
    2 year Time Deposit5.5%
    3 year Time Deposit5.5%
    5 year Time Deposit6.7%
    5-year Recurring Deposit5.8%
    5-year Senior Citizen Savings Scheme7.4%
    5-year Monthly Income Account6.6%
    5-year National Savings Certificate6.8%
    Public Provident Fund7.1%
    Kisan Vikas Patra6.9% (will mature in 124 months)
    Sukanya Samriddhi Yojana7.6%
    According to Rachit Chawla, Founder & CEO, Finway FSC, this decision to roll-back the cuts in schemes ranging from the National Savings Certificates or NSC and Public Provident Fund or PPF, is good news for the small savers.
    "If implemented, these cuts would have reduced interest rates to more than four-decades. The roll-back of this decision will benefit millions of middle-class depositors," Chawla said.
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