Live
- Kiran Abbavaram's Hard Work Pays Off: Bunny Vasu Lauds Ka Team at Success Meet
- PM Modi’s welfare schemes transform rural lives in Bokaro, residents share gratitude
- We will ensure Bangladeshi infiltrators are removed from Jharkhand: BJP's Gourav Vallabh
- Hezbollah fires five rockets at central, northern Israel: sources
- HM Amit Shah, Rajnath Singh to address several rallies in Jharkhand tomorrow
- Will not waste single day in getting back what we lost, Omar Abdullah tells Assembly
- PM Modi visits Advani's residence to wish him on birthday, shares special moment
- Sun-Dried Cotton to Be Taken to CCI Purchase Centers, Avoid Middlemen - Collector
- Survey Process Requires Public Cooperation - Collector Badavath Santosh
- Distribution of Maize Seeds to Farmers at Agricultural Research Center
Centre may cut rates on small savings next quarter
New Delhi: The government is considering rate moderation for small savings schemes in the upcoming quarter, a development that could lead to speedier...
New Delhi: The government is considering rate moderation for small savings schemes in the upcoming quarter, a development that could lead to speedier transmission of monetary policy rate cuts, sources said.
During the current quarter, the government refrained from cutting interest rates on small savings schemes, such as Public Provident Fund (PPF) and National Savings Certificate (NSC), despite moderating bank deposit rates. Bankers have been complaining that high rates on small savings schemes prohibit them from cutting deposit rates. Currently, there is a difference of nearly 100 basis points between deposit rate of banks and small savings rate for one-year maturity. Earlier this week, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) will take a call on an interest rate cut and all options were on the table to counter the coronavirus blow. Last month, the Governor in an interview said, "We have said it in MPC resolution that there is a case for reducing the small savings rates and aligning it more with the formula-based rate fixation. We have referred to it in the MPC resolution".
The MPC in its February Bi-monthly Monetary Policy Statement said that while there is a need for adjustment in interest rates on small saving schemes, the external benchmark system introduced from October 1 last year has strengthened the monetary transmission. The finance ministry has been nudging public sector banks to pass the whole repo rate cuts to retail loans for pushing consumption. Banks have resisted it fearing their margin will take a hit in case of 100 per cent transmission. Rates on small savings schemes are revised on quarterly basis.
On December 31, 2019, the government decided to keep interest rates for small savings schemes like PPF and NSC unchanged at 7.9 per cent for the fourth quarter of the current financial year, while the rate for the Kisan Vikas Patra maturing in 113 months was kept at 7.6 per cent. The interest rate for 5-year Senior Citizens Savings Scheme was retained at 8.6 per cent, while that for savings deposits was kept unchanged at 4 per cent a year. The interest on the senior citizens' scheme is paid quarterly. However, the government had said that during the January-March 2020 quarter, the Sukanya Samriddhi Yojana will offer 8.4 per cent rate.
