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The federal government has determined to go away the rate of interest on small financial savings devices unchanged for the October-December quarter, the sixth quarter in a row that the present charges on devices such because the Public Provident Fund and Nationwide Financial savings Certificates have been retained.
The federal government resets the rate of interest on small financial savings devices each quarter. Earlier this yr, the Finance Ministry had introduced charge cuts starting from 0.4% to 1.1% on such devices for the April-June quarter however reversed it inside hours, citing an ‘oversight.’
On Thursday, the Division of Financial Affairs within the Ministry stated in an workplace memo that the speed of curiosity on varied small financial savings schemes for the third quarter of monetary yr 2021-22 beginning October 1, ‘shall stay unchanged from the present charges relevant for the second quarter.’
Economists stated that the established order on small financial savings charges was anticipated, contemplating there was little change within the common general yields on authorities securities in current months. Furthermore, increased inflows into small financial savings might nudge the federal government to borrow greater than it had initially budgeted for the yr from this pool of funds.
The final minimize in small financial savings charges had been effected within the April-June 2020 quarter, when charges had been slashed between 0.5% and 1.4% on completely different devices, bringing the Public Provident Fund (PPF) returns right down to 7.1% from 7.9%.
For now, the quarterly rate of interest paid on one yr time period deposits stays at 5.5%, Senior Citizen Financial savings’ Scheme will proceed to earn 7.4% whereas the Sukanya Samriddhi Account Scheme’s return is 7.6%.
“The provisional knowledge launched by the Controller Normal of Accounts signifies that inflows into financial savings deposits and certificates, and PPF, rose by 19% to ₹1.1 lakh crore between April and August in comparison with ₹90,000 crore in the identical interval final yr,” stated Aditi Nayar, chief economist at ICRA.
“We anticipate continued influx of funds into small saving schemes within the coming months, with the benefit of upper spreads over banks’ lending and deposit charges. In our view, borrowings from the Nationwide Small Financial savings Fund might find yourself being modestly increased than the online budgeted quantity of ₹3.9 lakh crore,” she reckoned.
Supply- thehindu