The government has lowered interest rate on small saving schemes like PPF, Kisan Vikas Patra and Sukanya Samriddhi by 0.1% for the July- September quarter, a move that will prompt banks to lower deposit rates.

The rates have been lowered by 0.1% across the board compared to the April-June quarter. However, interest on savings deposits has been retained at 4% annually. Since April last year, interest rates of all small saving schemes have been recalibrated on a quarterly basis.

A finance ministry notification said investments in the public provident fund (PPF) scheme will fetch lower annual rate of 7.8%.

Kisan Vikas Patra (KVP) investments will yield 7.5% and mature in 115 months.
The one for girl child savings, Sukanya Samriddhi Account Scheme, will offer 8.3% annually, from 8.4% at present.

The investment on 5-year Senior Citizens Savings Scheme will yield  8.3%. The interest rate on the senior citizens scheme is paid quarterly.

Term deposits of 1-5 years will fetch a lower 6.8-7.6% that will be paid quarterly while the 5-year recurring deposit has been pegged lower at 7.1%.

“On the basis of the decision of the government, interest rates for small savings schemes are to be notified on a quarterly basis,” the ministry said while notifying the rates for second quarter of financial year 2017-18. While announcing the quarterly setting of interest rates, the ministry had said the rates of small saving schemes would be linked to government bond yields.