PPF, other small savings scheme interest rates kept steady for Q2. Details here

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In a huge relief to small investors, the Centre has kept interest rates on small savings schemes, including NSC and PPF, unchanged for the second quarter of 2021-22 amid the ongoing coronavirus pandemic.

This is the fifth quarter (ending September 30, 2021) in a row that the finance ministry has retained the interest rate on various small savings schemes.

The finance ministry notification read: “The rates of interest on various small savings schemes for the second quarter of the financial year 2021-22 starting from July 1, 2021, and ending on September 30, 2021, shall remain unchanged from the current rates applicable for the first quarter (April 1, 2021 to June 30, 2021) for FY 2021-22.”

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This means Public Provident Fund (PPF) and National Savings Certificate (NSC) will continue to carry an annual interest rate of 7.1% and 6.8%, respectively, in the second quarter as well.

The small savings schemes will continue to fetch small investors better rates than other fixed income avenues such as bank fixed deposits (FDs).

For example, the five-year fixed deposit under Post Office Savings Scheme gives a 6.7% interest rate. Top banks in India generally offer 5.4-5.5% interest rates on a fixed deposit of the same period.

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Earlier on 1 April, the Centre had swiftly revoked a steep interest rate cut of up to 1.1% for the first quarter on small savings schemes, citing oversight.

As a result, the first quarter rates were retained at the level of the fourth quarter of the last fiscal year. The cut was touted as the steepest cut in many decades.

Interest rates for small savings schemes are notified on a quarterly basis.

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One-year term deposit scheme will continue to earn an interest rate of 5.5% during the second quarter of the current financial year, while the girl child savings scheme Sukanya Samriddhi Yojana account will earn 7.6%.

The interest rate on the five-year senior citizens’ savings scheme would be kept at 7.4%. The interest on the senior citizens’ scheme is paid quarterly.

The interest rate on savings deposits will continue to be 4% per annum.

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Term deposits of one to five years will fetch an interest rate in the range of 5.5-6.7%, to be paid quarterly, while the interest rate on five-year recurring deposits will earn a higher interest of 5.8%.

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