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Govt withdraws order cutting interest rates for small saving schemes

NEW DELHI: The government of India has withdrawn an order that cut interest rates on Public Provident Fund (PPF) and other small savings schemes for the June quarter today.

“Interest rates of small savings schemes of GoI shall continue to be at the rates which existed in the last quarter of 2020-2021, ie, rates that prevailed as of March 2021. Orders issued by oversight shall be withdrawn,” Finance minister Nirmala Sitharaman tweeted.

Small savings scheme interest rates are released quarterly.

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On Wednesday, the rates of interest on various small savings schemes were revised for the first quarter of the fiscal year 2021-22, which runs from April 1 to June 30, 2021.

The five-year Senior Citizens Savings Scheme interest rate has also been slashed by 0.9 percent to 6.5 percent. The interest on the senior citizens’ scheme is paid out every three months.

For the first time, the annual interest rate on savings deposits has been cut by 0.5 percent to 3.5 percent, down from the previous rate of 4% annually.

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In 2016, the finance ministry stated that small savings scheme rates will be related to government bond yields when announcing the quarterly setting of interest rates.

On inflationary concerns, the Reserve Bank of India (RBI) held interest rates at 4% for the fourth time in a row last month.

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