Centre likely to decide on small savings rate by December-end

The Finance Ministry is expected to take a call on interest rate on various small savings, like Post Office savings and Public Provident Fund (PPF), by the end of this month.

The RBI and the banks have been pressing for reduction in small savings rates and bring them in line with market rate for effective transmission of monetary policy. With small saving deposits commanding a rate of 8.7-9.3 per cent, banks have been reluctant to transmit the entire policy rate reduction by Reserve Bank to borrowers.

Smalls saving schemes include Post Office Monthly Income Scheme (MIS), PPF, Post Office fixed Deposit Scheme, Senior Citizen’s Savings Scheme, Post Office Savings Account and Sukanya Samriddhi Accounts.