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Union Ministry of Finance notified interest rates on various Small Saving Schemes for Q1 of 2016-17

Mar 21, 2016 17:08 IST

The Union Ministry of Finance on 18 March 2016 notified interest rates on various Small Saving Schemes for the period between April 2016 and June 2016.

Though announcement of revised interest rates in March every year is in tune with the practice established in 2012-13, this is the first revision since the Government decided to implement quarterly revision.

The revised interest rates were recalculated with reference to the G-Sec yields of equivalent maturity for the months December 2015 to February 2016.

The revised interest rates are -

Instrument

Rate of Interest (April 2015 – March 2016)

Rate of Interest (April 2016 – June 2016)

Savings Deposit

4.0

4.0

1 Year Time Deposit

8.4

7.1

2 Year Time Deposit

8.4

7.2

3 Year Time Deposit

8.4

7.4

5 Year Time Deposit

8.5

7.9

5 Year Recurring Deposit

8.4

7.4

5 Year Senior Citizens Savings Scheme

9.3

8.6

5 year Monthly Income Account Scheme

8.4

7.8

5 year National Saving Certificate

8.5

8.1

Public Provident Fund Scheme 

8.7

8.1

Kisan Vikas Patra

8.4

7.8

Sukanya Samriddhi Account Scheme

9.2

8.6

Interest rates on various National Saving Schemes amended to spur economic growth

Background

• Since 2012-13, interest rates on small savings scheme were revised annually. The practice was based on the recommendations of the Shyamala Gopinath Committee.

• As per the earlier practise, the revised rates for the coming financial year were used to be announced in March every year.

• However, to ensure that the interest rates under Small Savings Schemes are more dynamically related to the current market rates the Government notified for quarterly revision in February 2016.

• The quarterly revision of interest rates will enable the Banks to move their interest rates in line with current money market rates.

• As per the notification, the interest rates, beginning from April 2016, will be reset every quarter based on the G-Sec yields of the previous three months.

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