The Department of Economic Affairs, Ministry of Finance has announced the interest rates for small savings schemes for the period April to June 2020 (1st Quarter of Financial Year 2020-2021).
The Government of India has slashed the interest rates of the small saving schemes very sharply for the first quarter of the financial year 20-21. This means investors will earn less from these instruments in the 1st quarter of Financial Year 2020-2021.
The Government cut the interest rates on various small savings schemes by anywhere between 70-140 basis points. Let us take a look at the interest rates applicable on post office savings schemes from April 1, 2020.
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Post Office Small Savings Schemes
PPF (Public Provident Fund), National Savings Scheme, Recurring Deposit Account, MIS, SCSS, SSA, and PO Time Deposit are very popular schemes among the Indians. Millions of Indians used to invest their money in these popular saving instruments.
Note that when you invest in NSC, RD scheme, SCSS, Time Deposits, KVP, and MIS then the rates of interest remain the same till the date of maturity. However, the rate of interest for the PPF scheme will change every quarter.
Quarterly Schedule for revision in Rates of Interest
The rates for post office small savings schemes are revised on a quarterly basis since April 1, 2016. The table below gives the information about the quarterly schedule for change in interest rates.
| S. No. | Quarter for which interest rates would be effective | The date on which it will be notified |
| 1 | 1st Quarter (April to June) | 15th March |
| 2 | 2nd Quarter (July to September) | 15th June |
| 3 | 3rd Quarter (October to December) | 15th September |
| 4 | 4th Quarter (December to March) | 15th December |
As per the schedule, the interest rates for post office saving schemes are announced for the 1st quarter of the financial year 2020-21 starting April 1, 2020, and ending on June 30, 2020. The Government of India has cut the interest rates on the small saving schemes by anywhere between 70-140 basis points.
Click here to read the office memorandum dated 31.03.2020 on the subject “Revision of interest rates for Small Savings Schemes” issued by the Department of Economic Affairs, Ministry of Finance.
Latest Interest Rates for Small Savings Schemes
Here is a quick look of the interest rates on post office savings schemes for the April to June quarter of the financial year 2020-21.
1. The Senior Citizens Savings Scheme (SCSS) will now fetch 7.4%, after an 120 basis points cut in its interest rate. Quarterly compounding and paid.
2. The investment in Sukanya Samriddhi Account Scheme will now fetch 7.6% against 8.4% earlier. Annually compounding.
3. The interest rate on NSC (National Savings Certificate) has been cut by 110 basis points to 6.8%. Annually compounding.
4. The Public Provident Fund (PPF) scheme will now earn 7.1% against 7.9% in the last quarter. Compounded annually.
5. KVP (Kisan Vikas Patra) will earn 6.9% against 7.6% earlier. Annually compounded. The scheme will mature (Double your money) in 124 months, as against 113 months earlier).
6. The five-year Post Office Monthly Income Scheme now fetch 6.6% against 7.6% earlier. Compounded monthly and paid.
7. Five years of Recurring Deposit Account will earn 5.8% from 7.2% per annum earlier. Compounded quarterly.
8. Time Deposits of 1 to 5 years period will offer the interest rate of 5.5% to 6.7% p.a. Quarterly compounding. Interest rates for 1 to 3 year Time Deposit are 5.5% p.a. and 6.7% p.a. for 5 year Time deposit.
9. The rate of interest on Post Office Savings Account will remain unchanged at 4%. Compounded annually.
Latest Interest Rates for Small Savings Schemes
In the following table, you will find the latest interest rates for post office savings schemes (April 1, 2020, to June 30, 2020)
| Scheme Name | Rate of Interest from 01/04/2020 to 30/06/2020 | Rate of Interest from 01/01/2020 to 31/03/2020 |
| Post Office Savings Account | 4% | 4% |
| 1 Year Time Deposit | 5.50% | 6.90% |
| 2 Years Time Deposit | 5.50% | 6.90% |
| 3 Years Time Deposit | 5.50% | 6.90% |
| 5 Years Time Deposit | 6.70% | 7.70% |
| 5 Years Recurring Deposit (RD) | 5.80% | 7.20% |
| 5 Years Monthly Income Account (MIS) | 6.60% | 7.60% |
| Kisan Vikas Patra (KVP) | 6.90% | 7.60% |
| 5 Years National Savings Certificate (NSC) | 6.80% | 7.90% |
| Public Provident Fund (PPF) | 7.10% | 7.90% |
| Sukanya Samriddhi Account | 7.60% | 8.40% |
| Senior Citizens Savings Scheme (SCSS) | 7.40% | 8.60% |
You can also view the earlier quarter’s interest rate in my earlier posts:
- Latest Interest Rates for Small Saving Schemes January to March 2020
- Latest Interest Rates for Small Saving Schemes October to December 2019
- Interest Rates for Small Saving Schemes July to September 2019
- Latest Interest Rates for Small Saving Schemes April to June 2019
- Latest Interest Rates for Small Saving Schemes January to March 2019
Final Thoughts
There are nine post office small savings schemes like PPF, NSC, RD, POTD, SCSS, KVP, SSA, Time Deposit etc. The Government of India has been lowered the interest rates for these schemes by anywhere between 70-140 bps for the first quarter (April to June) of the financial year 2020-21.
As the interest rates for small savings schemes have been slashed by between 70-140 bps for the April-June quarter. Now, millions of investors will earn less from these government-backed saving instruments. Therefore, the investors who depend on the income from these schemes, may need to revisit their portfolio.
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Soon we’ll be asked to pay banks for keeping our money.