Rate Cut in Small Saving Schemes

The government on Friday sharply reduced interest rates on small savings schemes across the board, including that on Public Provident Fund, Senior Citizen Savings Scheme and announced the highest reduction of 130 basis points in the case of one-year time deposit, as per an office order issued by the finance ministry. The rates on small savings schemes have been reduced to align them to market rates. The new rates, therefore, will be applicable from April 1 to June 30.
  “This will enable banks to consequently reduce their deposit rates and extend loan and credit to public and borrowers at lower rates.”
 The RBI has cut the repo rate, by 125 basis points since last January, but the banks reduced their lending rate by only about 70 basis points. The RBI is slated to review its monetary policy on April 4.