New Delhi: The government is likely to lower interest rates on small savings like PPF and post office deposits to bring them in line with market rates. Interest rate on small savings scheme is likely to come down, sources told PTI. The decision with regard to quantum of rate cut and time will be decided in the review to be undertaken by the Finance Ministry, sources said.
Economic Affairs Secretary Shaktikanta Das said: “It has been decided that with regard to transmission of rates, the government will undertake review of the small savings rates also.” “Small savings schemes will be reviewed. Interest of small savers will be kept in mind,” he said after the Reserve Bank slashed the benchmark rate by 0.5 per cent. There has been a call from bankers to lower interest rate on small savings as a high rate on such schemes run by the government makes fixed deposits of banks uncompetitive. With small saving deposits commanding a rate of 8.7-9.3 per cent, banks have been reluctant to transmit the entire policy rate reduction by RBI to borrowers.