To improve the situation of RBI and the government, the interest rates of Small Savings Scheme can be cut. In such a situation, June is the last investment opportunity for the investors.
In order to bring the country’s economy back on track due to Corona epidemic, the government had reduced the interest rate on FD last year. Now from July 1, the interest rates on small savings schemes can be cut again. This is indicated by the notification issued earlier by the government, which was issued on 31 May. But in view of assembly elections in many states, the notification was withdrawn the next day. But to improve the situation of RBI and the government, interest rates can be cut this time.
According to the report of Financial Express, the notification can be reissued from July. Experts say that interest rates have come down in the economy. In such a situation, interest rates can be reduced to boost the consumption of RBI and the government and revive the economy. Since the GDP contracted by 7.3% in FY21, there is a higher chance of a cut.
These schemes were cut in the notification
In the withdrawn notification, the interest rate for Public Provident Fund (PPF) was reduced from 7.1% to 6.4%. Whereas the interest rate in 5-year fixed deposit is 6.7% to 5.8%, Senior Citizen Savings Scheme (SCSS) from 7.4% to 6.5%, Monthly Income Scheme (MIS) from 6.6% to 5.7%, National Savings Certificate (NSC) from 6.8% to 5.9%. , Kisan Vikas Patra (KVP) was reduced from 6.9% (138 months duration) to 6.2% (124 months duration) and Sukanya Samriddhi Yojana (SSY) from 7.6% to 6.9%.
Why small savings scheme is popular
Risk averse investors mostly prefer to invest in small savings schemes. These banks offer higher interest rates than fixed deposits. According to the Reserve Bank of India (RBI) data, the share of small savings in household financial savings increased from 1.3% of GDP in Q3FY20 to 1.4% in Q3FY21.
Lock in at higher rates
If you want better returns from small savings schemes, then by the end of June is a good opportunity for you as an investor. In this, you can invest in any scheme with a tenure of 1 year to 5 years Post Office Fixed Deposit, NSC, KVP, 5 Year Recurring Deposit, MIS and SCSS. It will get better interest. If the account is opened before July, then you will get payment according to the current interest rate. Because when the interest rates are revised, these schemes pay contracted rates till maturity. However, in case of PPF or SSY, the entire balance is paid at the revised rates.
