Finmin withdraws order slashing rates on small savings schemes

The finance ministry on Thursday issued a formal order for withdrawal of the cut in interest rates on small savings schemes and restored the old rates.

Earlier in the day, Finance Minister Nirmala Sitharaman said the government will rollback the steep interest rate cut on small savings schemes.

It has been decided that the rate of interest on various small savings schemes for the first quarter of 2021-22 starting from April 1 and ending on June 30, 2021 shall remain unchanged from those notified for the fourth quarter January 1, 2021 to March 31, 2021 of 2020-21, as per an office memorandum.

"This has the approval of competent authority," it said.

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"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 Orders issued by oversight shall be withdrawn," Sitharaman had said in an early morning tweet.

On Wednesday, the ministry had reduced interest rate on Public Provident Fund (PPF) by 0.7 per cent to 6.4 per cent while National Savings Certificate (NSC) slashed by 0.9 per cent to 5.9 per cent for the first quarter of the current fiscal.

As old rates have been restored, PPF and NSC will continue to earn an annual interest rate of 7.1 per cent and 6.8 per cent, respectively.

Rate cuts on other small savings schemes have also been withdrawn.