Govt slashes interest rate on small saving, PPF to fetch 7.1%, NSC 6.8%

Ministry of Finance has issued a circular date 31.03.2020 vide which Interest rate on small saving has been reduced wef 01.04.2020 by 80 basis point to 140 basis points with effect from 01.04.2020. PPF Interest rate has been reduced to 7.1% from 7.90 % (reduction of 0.80% and Five year recurring deposit rates has been reduced from 7.20 percent to 5.80 % (reduction of 1.40%)..

This has been done after reduction in repo rates by the RBI by 75 basis points recently. Corona impact on economy is severe and in this difficult time govt is trying to stimulate demand by increasing Liquidity in the system by discouraging saving little bit and by proving easy finance to industry and consumers at lower rates. Now India has entered in Lower interest regime and rate of interest will go down further in future.

Now on expected Line, interest on GPF for center and state Govt employee will also be reduced to 7.10 and Interest on EPF will also be reduced by significant margin (0.50 to 1.00%) as earlier EPF Board has reduced the interest rate at much lower speed than other saving instruments.

Though the circular has notified rates up to 30.06.2020 but it is unlikely that interest rate will be increased from 01.07.2020.

It will hit hard mainly to elderly and retired person as they are mainly dependent on Interest earnings. Notification/Circular issued by Ministry of Finance is given as under.

The Revised Rate of Interest are as follows:

Govt slashes interest rate on small saving, PPF to fetch 7.1%, NSC 6.8%

Click Here to Read the Circular