-The Financial Express
If you are a risk-averse investor and have been banking on small savings schemes for the purpose of saving and investment as well as building your retirement nest egg, then there is some bad news for you. For, the government has reduced the return on small savings schemes – including Public Provident Fund (PPF), NSC, Kisan Vikas Patra and Senior Citizen Savings Scheme — by 10 basis points. Following these reductions, the interest rate on PPF is now 7.8 per cent, 5-year Senior Citizen Savings Scheme 8.3 per cent, Kisan Vikas Patra 8.5 per cent and NSC 7.8 per cent.
It may be noted that the small saving schemes interest rates, which are linked to the benchmark 10-year government bond yields, are now reset every quarter. The last revision in rates came in the month of March, when the rates for such schemes had been reduced by 10 basis points. Although these rate cuts are not good for small savers and senior citizens, however financial experts say that the reduction will help banks bring down the lending rates which is good for the industry. Also, this signals the government’s resolve to keep lowering cost of capital in our economy and is certainly a welcome move.
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