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Massive Rate Cut On Post Office Small Savings Schemes

The Department of Economic Affairs, Ministry of Finance has announced the latest interest rates on the Post Office Small Savings Schemes for the first quarter of the Financial Year 20-21.

Till now the Govt. has generally made only some minor changes in the same. However, on this occasion, it has slashed the rates very (very) sharply.

This will definitely hurt the investors in Small Savings Schemes. They have already been suffering as the interest rates on even the Bank Fixed Deposits have significantly come down in recent months.

The decision to bring down the interest rates was notified vide Office Memorandum F.No.1/4/2019-NS dated 31.03.2020 on the subject 'Revision of interest rates for Small Savings Schemes'.

(By now you would surely be aware that, as per the present policy, interest rates on Small Savings Schemes are reset periodically on a quarterly basis.)

Accordingly, the interest rates on various Post Office Small Savings Schemes for the first quarter of the Financial Year 2020-21 — i.e. Apr 1st to Jun 30th, 2020 — are detailed below:

Public Provident Fund (PPF) : Down from 7.9% p.a. to 7.1% p.a. [compounded annually]

5-year National Saving Certificate (NSC) : Down from 7.9% p.a. to 6.8% p.a. [compounded annually]

Monthly Income Scheme : Down from 7.6% p.a. to 6.6% p.a. [monthly compounding and paid out]

Senior Citizens Savings Scheme : Down from 8.6% p.a. to 7.4% p.a. [quarterly compounding and paid out]

Time Deposits
1-year Deposit : Down from 6.9% p.a. to 5.5% p.a.
2-year Deposit : Down from 6.9% p.a. to 5.5% p.a.
3-year Deposit : Down from 6.9% p.a. to 5.5% p.a.
5-year Deposit : Down from 7.7% p.a. to 6.7% p.a.
(All on quarterly compounding basis)

5-year Recurring Deposit : Down from 7.2% p.a. to 5.8% p.a. [compounded quarterly]

Kisan Vikas Patra : Down from 7.6% p.a. to 6.9% p.a. [compounded annually] 
(The scheme will now double your money in 10 years 4 months, as against 9 years 5 months earlier)

Sukanya Samriddhi Scheme : Down from 8.4% p.a. to 7.6% p.a. [compounded annually]

Savings Deposit : No change at 4% p.a. [compounded annually]


Alternatives to Small Savings Schemes
- Why Debt Mutual Funds AND Which Debt Mutual Funds
- 7.75% RBI Savings (Taxable) Bonds


Note:
1. The revised interest rates apply only to the "new accounts" opened during the respective period (except PPF and Sukanya Samriddhi Scheme, where the new rate is applied on the outstanding account balance).

2. For the existing accounts under all other schemes, the contracted interest rate remains unchanged until maturity.


For Information: Interest rates for the Financial Year 2019-20
- Quarter 1: Post Office Small Savings Schemes Investors Happy 
- Quarter 2: Tiny Cut In Post Office Small Savings Schemes Interest
- Quarter 3: Latest Post Office Small Savings Schemes Interest Rates
- Quarter 4: PO Small Savings Schemes Investors (Again) Happy

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