Interest rates on small savings received a huge cut on Wednesday with the government announcing interest on savings deposit will now be down from 4 per cent to 3.5 per cent annually, while Public Provident Fund or PPF will be down from 7.1 per cent to 6.4 per cent.
From Thursday, the beginning of the new financial year, National Savings Certificate (NSC) will get an interest of 5.9 per cent and the Sukanya Samriddhi Yojana will fetch an interest rate of 6.9 per cent.
The interest rate for the five-year Senior Citizens Savings Scheme, paid quarterly, has been lowered to 6.5 per cent. The interest rate on Kisan Vikas Patra (KVP) has been cut to 6.2 per cent.
The interest rate on post office savings deposits has been struck down to 3.5 per cent while term deposits of one-to-five years will fetch interest rate in the range of 4.4-5.1 per cent, to be paid quarterly and the interest rate on five-year recurring deposit will be 5.8 per cent.
This is the second time the government has cut interest rates on small savings schemes in the past one year.