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PPF NSC SSY and Other Small Savings Scheme Interest Rates for Q4 2019 -20

ppf-nsc-ssy-and-other-small-savings-scheme-interest-rates-for-q4-2019-20

The interest rate on Public Provident Fund (PPF), Sukanya Samriddhi Account, Kisan Vikas Patra, National Savings Certificate (NSC) and Other Small Savings Scheme will continue to fetch same interest rate for the quarter ending March 2020. PPF will continue to earn 7.9 percent for the quarter January’20 to March’ 20.

The government has notified the interest rates on Small Savings Scheme for the 4th quarter of FY 2019-20 on 31.12.2019.


The Government has announced the interest rate on small savings schemes for the fourth quarter of the current financial year 2019-20 on 31.12.2019.

All small savings schemes including PPF (Public Provident Fund), NSC (National Savings Certificate), SSY (Sukanya Samriddhi Yojana) and others will continue to fetch the same rate of interest between January and March quarter of FY 2019-20 as they were earning during the October to December quarter.

This was notified by the Department of Economic Affairs under the Ministry of Finance in a circular dated December 31, 2019.

For the third time in this financial year, the government has kept the unchanged rate of interest over the previous quarter. The last time the government has reduced the interest rate was for the second quarter of the fiscal year.

The interest rate on small savings schemes including PPF is revised on a quarterly basis.

There was apprehension in the market that the government may reduce the interest rates on the small savings scheme for the fourth quarter. This is due to the fact that a few days before the announcement of the interest rates the Reserve Bank of India (RBI) had asked the Finance Ministry to align the interest rates on PPF and other small savings schemes with market rates.

For a Term Deposit of 1 year - 10 years term, the State Bank of India is offering an interest rate of 6.25 percent which is increased by 50 basis points to 6.75 percent for senior citizen deposit holders. (Source: www.sbi.co.in)

Compared to it, the PPF interest rate stands at 7.9 percent whereas the 5-year Term Deposit is offering interest rate of 7.7 percent. The lowest interest rate it offers for a Term Deposit is 6.9 percent.

The Kisan Vikas Patra will continue to earn interest of 7.6 percent and it will take 113 months to double the principal amount of investment.

The Sukanya Samriddhi Account Scheme will continue to fetch higher rate of interest of 8.4 percent compared to other small savings schemes in the general category. The flagship scheme for senior citizen namely, Senior Citizen Savings Scheme is the top earner at 8.6 percent. In this scheme, interest is paid quarterly.

For a conservative investor, PPF and other small savings schemes like Sukanya Samriddhi Account and Senior Citizen Savings Scheme offer good returns. These products offer guaranteed, safe, and risk-free returns.

The 5-year Post Office Monthly Income Scheme (MIS), where interest is paid out monthly, will continue to offer 7.6%.

Small savings rates are revised every quarter and if there is no change in the rates, the finance ministry retains the existing rates. 

 Small Savings Scheme Interest Rates for Q4 of 2019 -20


Instrument
Rate of Interest w.r.t 01.01.2020 to 31.03.2020
Compounding Frequency
Savings Deposit
4
Annually
1 year Time Deposit
6.9
Quarterly
2 year Time Deposit
6.9
Quarterly
3 year Time Deposit
6.9
Quarterly
5 year Time Deposit
7.7
Quarterly
5 year Recurring Deposit
7.2
Quarterly
5 year Senior Citizen Savings Scheme
8.6
Quarterly and Paid
5 year Monthly Income Account
7.6
Monthly and Paid
5 year National Savings Certificate
7.9
Annually
Public Provident Fund Scheme
7.9
Annually
Kisan Vikas Patra
7.6
(will mature in 113 months)
Annually
Sukanya Samriddhi Account Scheme
8.4
Annually
Source: Department of Economic Affairs, Ministry of Finance


Recently, the government has introduced a new PPF Scheme, 2019 to replace all the previous PPF rules.

Under the new scheme, contributions into a PPF in a year can be deposited without any restriction. Earlier, there was limit of maximum of 12 contributions in a year. The maximum amount that can be deposited in a year is capped at Rs. 1,50,000 whereas the minimum amount of contribution is Rs. 500. Any deposit can be made in multiples of Rs. 50, instead of Rs. 5 under the rule of 1968.

Further, a discontinued (dormant) account will also earn the same rate of interest as an active account earns. But a penalty of 1 percent of interest rate will be applicable for premature closure of the account. An account can be closed prematurely only after 5 years and under specified circumstances.

Interest on loan taken against the PPF account is reduced by 100 basis points to 1 percent from 2 percent earlier.

Prior to 2016, the interest rates were announced once which was applicable for the full year. Interest rates were revised every year. From FY 2016-17, it was decided by the government that the interest rate on small savings schemes will be notified on a quarterly basis.

Read the full text of the circular:


F.No.1/4/2019-NS
Government of India
Ministry of Finance
Department of Economic Affairs
(Budget Division) 


North Block, New Delhi
Dated: 31.12.2019


Office Memorandum

Subject: Revision of interest rates for Small Savings Schemes.

On the basis of the decision of the Government of India, the rates of interest on various Small Savings Schemes for the fourth quarter of financial year 2019-20 starting from 1st January, 2020 and ending on 31st March, 2020 shall remain unchanged from those notified for the third quarter (1st October, 2019 to 31st December, 2019) of financial year 2019-20. The existing rates on various Small Savings Schemes for the third quarter of financial year 2019-20 are indicated below:

Instrument
Rate of Interest w.r.t 01.10.2019 to 31.12.2019
Compounding Frequency
Savings Deposit
4
Annually
1 year Time Deposit
6.9
Quarterly
2 year Time Deposit
6.9
Quarterly
3 year Time Deposit
6.9
Quarterly
5 year Time Deposit
7.7
Quarterly
5 year Recurring Deposit
7.2
Quarterly
5 year Senior Citizen Savings Scheme
8.6
Quarterly and Paid
5 year Monthly Income Account
7.6
Monthly and Paid
5 year National Savings Certificate
7.9
Annually
Public Provident Fund Scheme
7.9
Annually
Kisan Vikas Patra
7.6
(will mature in 113 months)
Annually
Sukanya Samriddhi Account Scheme
8.4
Annually

2. This has the approval of Finance Minister.


(Hanumaiah K.) 
Deputy Secretary (Budget) 
Tele — 01123095042


Download the Circular.



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