Small savings interest rates retained for January-March quarter

New Delhi, Jan 2 (IANS) Interest rates on small savings schemes like PPF and Kisan Vikas Patra have been kept unchanged for the fourth quarter ending March, the government announced, even as banks, flush with funds following demonetisation, have started cutting their deposit rates.

Interest rates of all small savings schemes for the January-March quarter have been kept unchanged at the levels of the previous quarter, a Finance Ministry notification here said.

"On the basis of the decision of the government, interest rates for small savings schemes are to be notified on a quarterly basis," the ministry said, notifying the interest rates for the fourth quarter of the current fiscal from January 1 to March 31.

Investments in Public Provident Fund (PPF) as well as in the 5-year National Savings Certificate scheme will continue to earn an annual interest rate of 8 per cent.

Kisan Vikas Patra (KVP) investments will continue to fetch 7.7 per cent and mature in 112 months.

The Sukanya Samriddhi Account Scheme for the girl child and the 5-year Senior Citizens Savings Scheme will both continue to yield 8.5 per cent per annum.

A savings deposit will fetch 4 per cent interest annually while term deposits of 1-5 years will offer 7-7.8 per cent.

The 5-year recurring deposit will continue to yield 7.3 per cent.

Meanwhile, with major infusion of fresh liquidity arising from the demonetisation measure, state-run State Bank of India on Sunday cut its lending rates by 90 basis points for maturities ranging from overnight to three-year tenures, after experiencing a surge in deposits.

State-owned IDBI Bank has also cut its MCLR by 30-60 basis points (bps) effective Sunday.

Similarly, state-run Punjab National Bank also slashed its lending rates across maturities ranging from overnight to five years with the new rates effective from Sunday.

According to estimates, banks have collected cash deposits of over Rs 14.9 lakh crore following Prime Minister Narendra Modi's November 8 announcement demonetising Rs 1,000 and Rs 500 notes to eliminate black money, counterfeit notes and terror financing.