PO small savings, PPF interest rates cut

Post Office small savings and public provident fund (PPF) account holders will earn less interest from April 1, 2013, with the government announcing a marginal cut of 0.10 per cent.

A finance ministry statement said on Monday that the interest rate of PPF has been lowered from 8.8 per cent to 8.7 per cent. The reduced interest rates will be applicable for entire 2013-14 fiscal, the statement added.

Senior citizens savings scheme (SCSS) has also not been spared and will now earn 9.2 per cent, down from 9.3 per cent.

The ministry, however, refrained from cutting the rates on savings deposit schemes and on fixed deposit of up to one year run by post offices and kept them unchanged at 4 per cent and 8.2 per cent respectively.

The Monthly Income Schemes (MIS) of five-year maturity will earn an interest of 8.4 per cent. The National Savings Certificates (NSC) having maturity of five and 10 years will now attract 8.5 per cent and 8.8 per cent interest respectively, down by 0.10 per cent.

The revision in interest rates follows a decision taken by government last year to link the small savings returns with the market rate. The new rates are required to be announced at the beginning of a financial year.

The decision is in line with the recommendations of Shyamala Gopinath Committee, which had suggested that returns should be in sync with market rates determined by the returns offered by other securities.