The Union Government
has announced revised rates of interest on various small savings schemes
for the first quarter of the financial year 2017-18. To bring such rates
somewhat closer to market rates, the Government has decided to effect a
reduction of 0.1 percentage points (10 basis points) in interest rates
across the board in all the schemes except the Post Office Savings
Account, which has been left untouched.
Government continues to accord highest priority to the interest of small
savers, especially savings for the benefit of girl child, the senior
citizens and the regular savers who form the backbone of our savings
architecture. The current revision of rates is reflective of the
Government’s commitment to calibrated reform in the financial sector to
ensure better interest rate transmission.
Various small savings schemes will continue to be very attractive
compared to bank deposits of similar maturities and tenor even after
this marginal reduction in interest rates by 0.1 percentage points.
Apart from offering higher interest rates compared to bank deposits,
some of the small savings schemes also enjoy income tax benefits.
Further, small savings schemes like Senior Citizens Savings Scheme (SCSS),
Sukanya Samriddhi Account (SSA), PPF, 5 year National Savings
Certificate (NSC), 5 year Monthly Income Scheme (MIS) and 5 year Time
Deposits (TD) enjoy additional interest rate spreads. This additional
interest rate spread is 100 basis points in the case of Senior Citizen
Savings Scheme, 75 basis points in Sukanya Samriddhi Account and 25
basis points spread in PPF, 5 year NSC, 5 year MIS and 5 year TD.